We have an 18 year old customer, Chuck Doe, with his own personal account. He brings in a check payable to John Doe custodian, Chuck Doe UTMA (not drawn on our bank). The check is brought in with John's endorsement. Chuck endorses and wants deposited to his personal account. Can we / should we let him deposit to his personal account? I understand there is the risk of John's endorsement being a forgery. What are the UTMA implications since he's 18? We don't have the underlying UTMA details because none of our accounts with the Doe's are UTMAs.

How would you recommend handling the transaction? I've been brought in after the fact, but apparently Chuck does this from time to time so could do it differently next time. Occurred to me to just contact John (custodian) and ask him about the checks and the UTMA. John is also a customer (individually) but then what about Privacy issues?!?!?!

Help or input would be appreciated.

Kim, State law dictates the age. Are you sure it is 18 in your state? I know it is different than 18 in our state.

Yes, it is 18. It can be 21 if the UTMA was created as a result of an insurance claim or some type of court order. Of course, we don't have the details on this particular UTMA so really can't be sure, either. . .

This seems fairly complicated but I can't see where there would be a privacy issue to call an verify the endorsement.

I would recommend having them establish a custodial account and deposit the item into it. Or request that the custodian start presenting the check. Or if he truly is not a minor than they should request the check is payable directly to that person. I, personally would not want our tellers cashing the check without the custodian there. But this has to be in your procedures so this is handled the same all the time with all customers.

I have a book that states how the account and checks are to be written for my state. Can you get one for your state?

Opinions are mine not my employer.

As far as the endorsement of John Doe, you can always ask Chuck Doe, your customer, to have John Does endorsement guaranteed by his bank.

This means John has to take the ckeck to his bank and have an endorsement guaranteed stamp put underneath his signature, which guarantees your bank, that his endorsement is valid.

What this sounds like is a custodian who hasn't taken the time to convey the assets (stocks, savings account, etc.) from the UTMA registration to the name of the former minor. If, as some in this string have suggested, the age of majority under this state's UTMA law is 18, the beneficiary (the 18-year old) should ask the custodian to hand the property over completely.

Otherwise, what should be happening is for the custodian to deposit these checks into a deposit account with UTMA registration and then withdraw the funds (check or otherwise) to remit to the beneficiary.

Kim: What your particular state law says may make all the difference.

The state UTMA laws ive seen (and I certainly havent seen them all) have provided specific protections to 3rd parties (like banks) but only when the 3rd party deals only w/the custodian. By dealing with the (minor?), your bank may be giving up a big protection under state law, particularly if there is a ? later about whether the (minor?) should have had the $ or if it was misspent.

As for the (minor?) his recourse (and that of the custodian) is to go to the entity that is issuing the check and get the check re-issued in the name of the (minor?) only. The issuer of the check will have a field day against your bank if the $ is misspent, b/c it protected itself by issuing the check to the custodian, but your bank lost this protection when it dealt with the (minor?) and not the custodian.

Alternatively, you could analyze the check as you would any other:

(a) if a check payable to Sam Smith is presented by Sally Field and Sam's endorsement is on the check, do we feel comfortable allowing Sally to deposit/cash the check?

To a degree, I dont see the difference btwn your situation and this hypo.

A lazy custodian that either doesnt want to open a UTMA acct w/your bank or go to the source (the issuer) and get the checks issued to the (minor?) directly (if this si appropriate at all) shouldnt be allowed to expose your bank to this type of risk. After all, what is your bank getting in return for accepting this risk? Is this a 6 figure CD or a checking acct w/an avg collected balance of $1K?

I AM NOT ENGAGED IN PROVIDING LEGAL ADVICE AND THE VIEWS EXPRESSED ARE NOT THOSE OF MY EMPLOYER

Thank you all for your responses. You all had a lot of great insight and gave me much to think about. That's why we all come to these threads so often, isn't it?? Thanks again.