Legal Question in Wills and Trusts in Colorado
i have a younger brother and sister that both had an inheritance in the bank supposed to be untouchable until their 21st birthdays. their father took a loan out at that bank and used the inheritance for collateral. he never paid on his loan, and my brother and sister lost their inheritance. they are only 14 and 18 right now, is that legal, and was it legal for the bank to allow their father to borrow against that money?
2 Answers from Attorneys
The confusion here may lay with their father rather than the bank. Understanding how the two heirs received the money and how it was to be held may be the issue. It may be possible a special type of account, a "uniform gift to minors act" or uniform transfer to minors act" type of account should have been established. it is highly unlikely that such an account was established and then the bank allowed the father to use that money as collateral or security for a loan to him. I am guessing the father received the money on behalf of the two heirs, put it in the bank to be held in an informal arrangement between he and the two heirs and the bank had no notice or understanding of what type of account it should have been.
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