I work at a small community bank were most everyone here knows all of our customers. We have a couple of account holders that are elderly and cannot take care of their accounts, monthly bills, and exc. We allow their caregivers to conduct business for them but do not require the caregiver to be a authorized signature on the account. The care givers are known by the employees of the bank but how are we for sure that they are conducting the account the way the account holder really wants it to be done. Example: caregiver coming and withdrawing $400 cash to pay bills with. I was wondering what kind of legal problems we are open to and maybe any suggestions that anyone would have.
dan.darden@firststatebank-olmsted.com

You are not allowing them to sign on the accounts - right. The customers are signing the checks for the withdrawal of funds - right?

No the caregiver is signing the checks but they are signing the account holders name.

So what you are saying is that your bank has the opportunity to make everyone of those checks good. The bank is aware that the signature on the checks are forged and you gave out the money anyway - not a jury in the world is going to help you. You need to seek legal counsel.

You really need to speak to bank's counsel immediately.

You have an extremely dangerous practice. A few caregivers that turn to the dark side of the force can cause your institution a lot of pain. A bank should never honor any item that has not been authorized by its customer.

I would stop this immediately and let the account holders know why, as no information should be given to the care takers; nor should anything else for that matter. This could come back to haunt you later....

There isn't much to disagree with in the advice you have received; the practice is indefensible. However, my first bank had $12 million dollars in assets, I knew everyone who came through the door, I would have known and trusted the caregivers, and would certainly have known that Mrs. Gentry would never blame the bank for any alleged misuse of the funds. The problem is that it's not Mrs. Gentry the bank will be dealing with.

At some point, either upon her death or disability, others will be involved. If it's the son who moved away 20 years ago he has completely forgotten about the communal nature of a small town. It will be beyond his comprehension that you would do such a thing. If he's the personal representative of his mother's estate he will feel that he has no choice but to make a claim against the bank for the forgeries. The "character" issues you rely on every day in a small town play a lesser role when you are discussing the bank's business and setting an example for younger employees to follow.