I am curious as to how other banks handle UTMA accounts and online banking. Should we be allowing the custodian on the UTMA to set up online banking and transfer funds from the UTMA account to their own account (the custodian). We currently have a customer who showed up on our Reg D list for going over her 6 limited transactions and it was from her childs UTMA account. We have discussed this in our File Maintenance meetings and we are split as to whether this should be allowed or not. I know the custodian has the right to withdraw funds for the benefit of the child and I know it is not the banks responsibility to police the account. Allowing online transfers to the custodians personal account just seems off some how. I would appreciate any other thoughts on this.

Thanks
Lisa

My bank doesn't allow the transfer of funds between accounts unless the account titles are identical. I was always told that a minor could come back and claim fraud and the bank would be in the position of having to prove their case in a court of law. We also don't let them transfer between accounts at a teller. They have to take a cashier's check withdrawal to themselves and then deposit the check. Some say old-fashioned but hopefully it protects the minors funds.

Thank you for your response. I was also told that the minor could come back and sue the custodian but wasn't sure what involvement the bank would have. I'm leery about allowing online banking access (transfers) to UTMA accounts but as I stated above there are others in the bank that don't see a problem with it. Thus why I was looking for other opinions.

Thanks again!

Really good rule; eliminates a lot of problems.

As to the UTMA, it appears that the custodian is breaching her fiduciary duty. If a review of her account activity after she transfers funds from the minors account supports that conclusion; i.e. the money is not being used for the sole benefit of the child, terminate the account.

Note, if you had the first rule in place, you would not have this issue at all.

Thanks Ken - I agree. I was a little shocked to find that we had even allowed online banking to be set up on the UTMA account. Now to convince everyone else that we should not be allowing this to happen.

I really appreciate your input!