What happens to a UTMA account when the minor turns 21?
But when your child reaches the age of majority – 18 or 21, or even older, depending on the state – you, as the custodian, lose all control over the account. The funds then belong to your child, and the child is the only one who can decide what happens to the money.
At what age does a UTMA account terminate?
The Uniform Transfers to Minors Act (UTMA) allows you to name a custodian to manage property you leave to a minor. The management ends when the minor reaches age 18 to 30, depending on state law.
Can you convert an UTMA to a trust?
The “Uniform Transfers to Minors Act” body of law adopted by many states provides that, prior to the minor reaching age of majority, a custodian may transfer UTMA assets to a “Qualified Minors Trust.” That means a new trust is formed and the custodian transfers assets into the new entity without a court order.
Can a UTMA be revoked?
Unfortunately, a UTMA is an irrevocable account and legally belongs to your child. This means you cannot simply terminate it like you would a living trust or your own accounts.
Can a parent close a UTMA account?
Termination under the UTMA is set at age 21, unless the creator of the account elected for the termination to be at age 18. The custodian is required under the law to deliver the funds to the owner upon the minor attaining the age of 21 years, or to the minor’s estate in the event of his death.
Can I transfer an UTMA to an irrevocable trust?
Transfers under the UTMA are irrevocable and leave the donor with no legal or equitable rights in the property. Rather, title is registered in the name of a custodian for the benefit of the minor. The custodian has broad powers regarding the use of the funds for the minor and serves in a fiduciary capacity.
Can you use UTMA for college?
You can use the money in an UGMA or UTMA account for any purpose, not just to pay for college. 529 plan distributions are subject to a 10% tax penalty if you don’t use the money to pay for qualified expenses.
Are custodial accounts revocable?
Custodial accounts do not require distributions at any point. Gifts to a custodial account are irrevocable, which means that they can’t be adjusted or reversed. The account’s holdings irrevocably pass into the minor’s control when they come of age depending on their state of residence.