Answer:
Answer by John Burnett: Although the cashing of such a check wouldn't by itself put the bank on notice of a fiduciary breach under UCC 3-307, it does leave the door open for a claim of such a breach, so it's not a recommended business practice. A best practice is to require that such a check be deposited to an account held by the guardian in that capacity, on behalf of the protected individual or ward.
Answer:
Answer by Ken Golliher: Any fiduciary has a responsibility to account for the funds they receive. That is rendered impossible if they cash checks payable to the person in whose interest they are supposed to be acting. My interpretation would be that your bank is on notice of the breach of duty simply because you cashed the check. From my perspective, you could and should be held liable for having done so. If you are going to allow this I suggest you let your bank counsel break the tie.
First published on BankersOnline.com 6/3/13
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