Privacy Disclosure Requirements For Deposit Account Beneficiaries

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Question:

It seems as though I researched this some time ago, but am at a loss for the answer. With regards to Regulation P, is the beneficiary of a deposit account considered a customer? Should the beneficiary be mailed an annual privacy notice? We apparently included them in our mailing this year and have made some account owners very unhappy.

Answer:

If the deposit accounts to which you refer are of the typical "Totten Trust" or POD ilk, the beneficiaries are not your customers because they hold no interest in the accounts until the death(s) of the account owner(s). You have no obligation to provide privacy notices to the beneficiaries of the accounts, and you ought not do so, if for no other reason than to avoid ruffling your customers' feathers.

First published on BankersOnline.com 8/12/02