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Issuing Debit Cards to Trustees

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Question: 
By issuing debit cards to the trustees of an account owned by a revocable living trust, is the financial institution opening itself up to risk? If so, what kinds of risk? What does Reg E say about these situations? Example: The Smith Family Revocable Living Trust Charles Smith, co-trustee Mary Smith, co-trustee. The debit cards would be issued to Charles Smith and Mary Smith.
Answer: 

Regulation E says that it covers consumer asset accounts, and that a consumer is a natural person. Regardless of the fact that the revocable living trust is represented by living, breathing, natural persons; it is not a natural person itself, so the regulation does not cover transactions in the account. I see no compelling reason not to issue debit cards to the trustees, unless your bank's policy prohibits it.

First published on BankersOnline.com 11/23/09

First published on 11/23/2009

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