Custodian Borrowing Against Minors Account

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Question:

Can a custodian of a minor's account borrow money against that account? Doesn't the money belong to the minor?

Answer:

The custodian's powers are listed in the UTMA statute. The statute does not permit the custodian to pledge the minor's account as collateral for a loan regardless of the purpose of the loan. The pledge is meaningless and puts the bank on notice of a breach of fiduciary duty.

First published on BankersOnline.com 3/22/10