I could really use some help with this. We have a customer who applied for an Unsecured Line of Credit. The loan is to the estate. This is not a trust. The personal representative is the person signing on behalf of the estate. If the loan is for consumer purpose, would it fall under Reg. Z? I know there is language in Reg. Z for Trust loans, but not loans to an estate. Would the estate be exempt as an entity like LLC's, Corporations, etc? Thank you in advance for your help.

Estates are not addressed in Regulation Z and I would say it is exempt. But an estate borrowing on a unsecured basis and for a line of credit is highly unusual and I have never actually ever heard of such a need. Has this transaction been vetted by your legal counsel?

I did actually just find out that it will be secured by a wealth management account. I also found out that it is to refinance the loan from the individual that passed away to their estate. It was previously a consumer purpose loan to the individual. I honestly don't know if it has been vetted by our legal counsel. I would assume it has, only because it has been approved by our Board. In your opinion, would this be considered a non-natural person now that it is being refinanced into the name of the estate and should be a commercial loan and not a consumer loan? Sorry for not having all of the information beforehand.

An estate is not a natural person. How you categorize a loan internally is a business decision, but it would not fall under the Regulation Z open end rules.

Thank you.