Account Ownership and Telephone Transfers
Question: I was always taught that the ownership on accounts must be the same for customers that want to do telephone transfers. Is that true? For instance, if a wife has an individual savings account and the wife and husband have a joint checking account, can the bank set the customer up for telephone transfers?
We have not allowed this in the past but now are being challenged as to why not. I can't find any specific regulation that governs ownerships of accounts for telephone transfers - which leads me to believe I've been taught wrong all these years.
Also, can an individual savings account be used as overdraft protection for a joint checking account or is this just bank policy on whether or not we want to allow it?
Answer: Let's take your questions one at a time. Is it necessary that ownership on accounts must be the same for telephone transfers? Unfortunately, not just a "yes" or "no" answer. Obviously, if the savings is in the name of the wife, the husband cannot command a transfer of funds out of the savings account into the joint checking account. By the same token, if the transfer is going the other way, either could direct that it be done, although this is similar to allowing a deposit into one person's account by another. Not a good banking practice, and one that your bank policy might prohibit.
If you are setting up an automatic transfer, the names on both accounts should be the same, UNLESS the single name account holder agrees to the transfers in writing.
As for using a single name account for overdraft protection for a joint checking account - if you have a depositor who wants to do that, I would want those instructions to be in writing, signed by the single named account holder.
Both of your questions are simply a matter of bank policy up to the point of liability under U.C.C., which drops back to "properly payable" rules. If you do not have the authority to pay funds from an account under those rules, you can't do it without assuming a great deal of unnecessary liability.
So, no, you have NOT been wrong all these years! An individual can only command action on an account on which he or she is a signer. Care should be taken that your deposit agreement states that both parties on the joint account are equally and wholly liable for any debt by overdraft incurred by either of them. The 'new' U.C.C. says that unless your agreement states that, only the party who benefits by the transaction overdrawing the account can be held liable.
Copyright © 2003 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 13, No. 9, 12/03
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