Can a bank give the beneficiary on a custodial account a loan?

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Can a bank give the beneficiary on a custodial account a loan?

I am the representative payee for someone’s social security benefits. This person is 35 but deemed not able to make financial decisions for themselves by the social security administration. When I became payee, my bank said that I needed to open a custodial account in order to deposit the checks. Last month they left the beneficiary for the checks open up a line of credit on the account, and they are now coming after me for the money. They now say the account isn’t a valid custodial account because I’m not her legal custodian. Can they come after me for the money?

Asked on September 26, 2011 under Bankruptcy Law, Ohio

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If there is a custodial account where you are the custodian for a bank account all decisions must be made by you concerning the account. It seems improper for the bank to allow the beneficiary to open up a line of credit as to the custodial account to draw from without your approval in writing.

I would speak to the branch manager about this situation and if you do not receive a satisfactory response, speak with his or her supervisor. You might also need to consult with an attorney familiar with banking law.

The bank cannot legally come after you for the money drawn by the beneficiary because you did not pull it out.

 


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