Deposit Accounts and Payment Instruments
Deposit Accounts and Payment Instruments covers ownership structures, the documents that establish them, and the rules governing checks, cards and stop payments. Expect questions on joint accounts, fiduciary accounts, endorsements and liability for unauthorized debit card use.
Core rules
- Ownership types: single; joint with right of survivorship; payable-on-death (Totten trust); UTMA custodial (an irrevocable gift, custodian until the age of majority); fiduciary; and business accounts requiring a resolution and beneficial-ownership certification.
- The signature card and account agreement define authority; a signer is not automatically an owner.
- Cashier's checks and money orders are bank or issuer obligations, not personal checks, and are treated differently on stops and returns.
- A stop payment on a check lapses after six months unless renewed, and it cannot stop an item already paid.
- A check stale-dated more than six months may be returned; post-dated checks should not be paid before their date.
- Under Reg E, reporting a lost debit card within two business days limits liability to $50; waiting up to 60 days raises it to $500, and longer can mean unlimited loss.
Worked example
A customer asks you to stop a $900 check that cleared yesterday. You cannot stop an item already paid. Explain that the bank can request a return from the depositing bank, but the funds may not be recovered, and offer to place a stop on any outstanding duplicates.
Traps
- Believing a verbal stop lasts forever; written confirmation may be required within 14 days.
- Assuming a joint account is split 50/50 for tax or estate purposes.
- Quoting the $50 Reg E cap when the customer reported months late.