Answer by Randy Carey: The Bank would be liable for the entire amount, just as if you allowed any non-authorized signer to withdraw money from any other type of account.
Answer by John Burnett: Randy is correct. However, I'll offer a slightly less black and white opinion. The funds in the account are supposed to be used by the Custodian for the minor's benefit or provided by the Custodian to the minor. The custodian will have to decide whether to pursue the bank for reimbursement (as would be the case in any other wrongful payment situation). Depending on what the minor used the funds for, the bank's creative attorney might be able to argue against bank liability, but the bank would lose in the court of public opinion, if the facts got out.
Contact the Custodian, explain the situation and see what you can work out.
First published on BankersOnline.com 10/3/11