How to Make a Check Payable to Someone Else

When you receive a check and wish for someone else to receive the funds, you can transfer its ownership. This process, known as endorsing a check to a third party, makes it payable to them, allowing the original recipient to direct payment to another person rather than depositing or cashing it themselves.

Understanding Endorsement Types

Endorsing a check involves signing the back to authorize its processing or transfer. There are several ways to endorse a check, each with different security implications. A blank endorsement occurs when you simply sign your name on the back. This method is least secure because it transforms the check into a bearer instrument, allowing anyone in possession to cash or deposit it.

A restrictive endorsement limits what can be done with the check, offering enhanced security. For example, writing “For Deposit Only” with your signature ensures the check can only be deposited into an account and cannot be cashed. This type of endorsement is useful for preventing unauthorized access to funds if the check is lost or stolen.

The most relevant type for transferring funds to another person is a special endorsement, also known as a third-party endorsement. This involves writing “Pay to the order of [Third Party’s Name]” followed by your signature as the original payee. This instruction clearly designates the new recipient, limiting the check’s negotiation to that named individual.

Endorsing a Check to a Third Party

Locate the endorsement area on the back of the check, typically marked with a line or box. In this space, write “Pay to the order of” followed by the third party’s full name. Ensure their name is written precisely as it appears on their official identification to avoid processing delays.

Below the “Pay to the order of” statement, sign your name as the original payee. Your signature must match the name printed on the front of the check for validity. This dual endorsement, with the third party’s name and your signature, completes the transfer of ownership. Some banks may suggest including an account number if the check is for direct deposit into the third party’s account.

Once you have completed your endorsement, the third party must also endorse the check by signing their name below yours. This second signature signifies their acceptance of the transferred funds. The check can then be presented to their bank for deposit or cashing, subject to their bank’s policies.

Important Considerations

Not all financial institutions accept third-party checks, and policies vary significantly. The third party should contact their bank beforehand to confirm their acceptance policy and any specific requirements, such as needing both the original payee and the new recipient to be present. Some banks may refuse to process such checks due to increased fraud concerns.

The original payee retains liability if the check is fraudulent or subsequently dishonored, even after endorsing it to a third party. If the check bounces, your bank may seek to recover the funds from your account. For security, avoid leaving a check blankly endorsed, as anyone who finds it can cash it. Instead, specially endorse the check just before handing it directly to the intended third party to minimize risk.

The third party will need valid government-issued identification to cash or deposit the check. Banks require this to verify identity and prevent fraud. Prompt deposit or cashing is recommended to prevent issues like check expiration or changes in bank policies.