Reg E - Debit Card for Trustees of Living Trust
by John Burnett, BOL Guru Guru BIOS
Question: We have a revocable living trust account for John and Mary Smith. John and Mary Smith are their own trustees. They want a debit card. As far as Reg E is this considered a consumer account, or should it be treated as a non-consumer entity (like a business)? Should they even have the ability to have a debit card?
Answer: There are those who will disagree with me on this. However, Regulation E covers EFTs in consumer accounts only. A consumer account is an account held by a consumer, and a consumer, by Regulation E definition, is a natural person.
Although the account will undoubtedly be used for personal, family, and household purposes, it's owned by a trust, which is not a natural person. The fact that it's controlled by a natural person doesn't change its ownership, any more than the fact that General Motors is controlled by natural persons would make a debit card issued to access GM's corporate accounts subject to Reg. E.
Should you treat this account like a business? That's up to you. You can provide all the protections of Regulation E if you wish, but you don't have to. If you treat it as a non-consumer account, I suggest you make certain you don't provide Reg. E disclosures, and that you have the trustee(s) sign the same documentation you have businesses sign when you issue them a card. That would include a statement that the account will not be subject to the protections of the EFTA, Regulation E, or any comparable state consumer-protection law or regulation.
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