We are aware that Custodial Accounts should never be overdrawn but ultimtely, whose responsibility is it to make sure it doesn't overdraw? The bank? The customer?

Please advise. Thanks!

It is ultimately the custodian's responsibility, but if you are paying such accounts into the overdraft, you are making the bank culpable in the mismanagement of the account. By the way - what is a livestock barn custodial account?

So our bank is being 'culpable' to the mismanagement of any account (consumer or commercial) if we pay checks which overdraw accounts....is that what you're implying?




https://www.gipsa.usda.gov/psp/publication/broch/custodial.pdf

No - that is not what I am saying. But on any type of an account that involves a fiduciary relationship you are on notice that the account should never be overdrawn. The bank should have any fiduciary account automatically set to pay-none.

Note the use of the word "fiduciary." You are obviously aware of the fiduciary's misfeasance or malfeasance if an NSF item is presented and your risk of not getting paid back is much greater than normal. Allowing overdrafts on any fiduciary account is foolish.

For a specific example, read the brochure you linked. It describes an account shortage as a violation of law... While rlcarey might not say your bank would be culpable in this instance, I definitely would.