Minor Endorsement

When I was trained on teller, several years ago in a land far away, we were told not to have a minor endorse checks because their signature isn’t legally binding. They would need to open a minor savings account and the custodian of that account could sign on their behalf. Or, we would treat it as a third party check and allow the legal adult to simply cash it against their account. At my current FI we cash checks payable to minors as long as the minor and an adult account holder have endorsed the back. No custodial account is required but we do require the minor to sign if they "appear" to be old enough. It seems to leave an inordinate amount of gray area. (How do you determine when a minor should be able to endorse a check or what if the minor isn't with the account holder and what if they aren't really a minor)? Can we simply have the custodian endorse it as follows: Custodial signature FBO Minor Name or is the minor's endorsement required?

In Kentucky, a contract with a minor is voidable. In theory, upon reaching the age of majority, a minor can say, "I changed my mind, you need to pay me again." Although there is an exception in Kentucky law that says a bank may open an account for a minor and still have a valid contract, it does not carry over to the endorsement of a check.

Perhaps when you cash a check payable to a minor you are accepting a certain amount of risk. When you have the parent endorse the check after the minor you are essentially relying on the parent's warranties and obligation, not the minor's. Any risk is based on your inability to collect the funds from the adult. It's a reasonable practice, but it may be an excess of caution.

Custodians should never be endorsing checks for cash; their title says they are to hold the monies for the benefit of the minor and they have a responsiblity to account for the disposition of the funds.