Author Topic: Age of Majority and UTMA question  (Read 3662 times)

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1192
  • Location: West-Central Florida - USA
Age of Majority and UTMA question
« on: March 15, 2016, 02:41:43 PM »
For my kid's Uniform Transfers to Minors Act accounts the age of majority is 18 (in Florida). I will ask my tax guy in a few weeks (during our yearly "visit"), but do any of you know if this must be done by that age? The kid in question just turned 19, and a few days later I found out about the age of majority stuff!

seattlecyclone

  • Magnum Stache
  • ******
  • Posts: 4842
  • Age: 34
  • Location: Seattle, WA
Re: Age of Majority and UTMA question
« Reply #1 on: March 15, 2016, 03:04:24 PM »
I don't think there's any way around the age limit for UTMA accounts. You would probably need to have established an alternate vehicle (such as a trust) if you wanted to set up a different schedule for transferring assets.

Sounds like the money, legally speaking, belongs to your kid now. Of course there's nothing stopping you from implying that use of those funds for a non-approved purpose could have future consequences (less help with school, less inheritance, etc.). I'll leave it to you to decide whether that will be necessary or appropriate in your situation.

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1192
  • Location: West-Central Florida - USA
Re: Age of Majority and UTMA question
« Reply #2 on: March 15, 2016, 06:28:57 PM »
Thanks seattlecyclone. I am concerned that I missed the time frame for transferring it (while the kid was 18) and that I might somehow be penalized.

seattlecyclone

  • Magnum Stache
  • ******
  • Posts: 4842
  • Age: 34
  • Location: Seattle, WA
Re: Age of Majority and UTMA question
« Reply #3 on: March 15, 2016, 07:54:36 PM »
As far as I know, you don't have to take any action to "transfer" the money. The account just automatically becomes property of your child on their birthday, and now they are the ones who get to make any relevant investment/withdrawal decisions instead of you.

LeRainDrop

  • Handlebar Stache
  • *****
  • Posts: 1841
Re: Age of Majority and UTMA question
« Reply #4 on: March 15, 2016, 10:07:19 PM »
For my kid's Uniform Transfers to Minors Act accounts the age of majority is 18 (in Florida). I will ask my tax guy in a few weeks (during our yearly "visit"), but do any of you know if this must be done by that age? The kid in question just turned 19, and a few days later I found out about the age of majority stuff!

I only did quick research on this, but it looks to me like Florida's UTMA actually defines minors as persons under age 21, so there are still a couple years left for the custodial account.  Plus, with changes to Florida's law in 2015, new custodianships can be created to last up until age 25.  http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0710/0710.html

Quote
710.102 Definitions.—As used in this act, the term:
(1) “Adult” means an individual who has attained the age of 21 years. . . .
(12) “Minor” means an individual who has not attained the age of 21 years. . . .

710.123 Termination of custodianship.—
(1) The custodian shall transfer in an appropriate manner the custodial property to the minor or to the minor’s estate upon the earlier of:
(a) The minor’s attainment of 21 years of age with respect to custodial property transferred under s. 710.105 or s. 710.106. However, a transferor can, with respect to such custodial property, create the custodianship so that it terminates when the minor attains 25 years of age;
(b) The minor’s attainment of 18 years of age with respect to custodial property transferred under s. 710.107 or s. 710.108; or
(c) The minor’s death. . . .
(4) Notwithstanding the definition of the term “minor” as provided in s. 710.102, if the transferor creates the custodianship to terminate when the minor attains 25 years of age, solely for purposes of the application of the termination provisions of this section, the term “minor” means an individual who has not attained 25 years of age.
« Last Edit: March 15, 2016, 10:10:44 PM by LeRainDrop »

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1192
  • Location: West-Central Florida - USA
Re: Age of Majority and UTMA question
« Reply #5 on: March 16, 2016, 05:29:26 AM »
LeRainDrop

That was very helpful - thank you. I must have gotten old information on the 18 years of age. Here is the statute:

(a) The minor’s attainment of 21 years of age with respect to custodial property transferred under s. 710.105 or s. 710.106. However, a transferor can, with respect to such custodial property, create the custodianship so that it terminates when the minor attains 25 years of age;

neophyte

  • Pencil Stache
  • ****
  • Posts: 560
  • Location: A wretched hive of scum and villainy
Re: Age of Majority and UTMA question
« Reply #6 on: March 16, 2016, 08:00:56 AM »
It might vary by state, but in my case there was no automatic transfer.  My father is still the custodian of my account and I'll be 30 soon.  We've discussed getting it changed, but haven't gotten around to it since it's just sitting in the stock market and I trust my dad. I pay the taxes on it every year and there haven't been any additional contributions since whenever the cutoff was.

Rollin

  • Handlebar Stache
  • *****
  • Posts: 1192
  • Location: West-Central Florida - USA
Re: Age of Majority and UTMA question
« Reply #7 on: March 16, 2016, 08:21:47 AM »
A form I received from Vanguard says "If you decide to open a UGMA/UTMA account, it's important to note that the custodian must initiate the transfer of assets when the child reaches the age of termination - as the assets don't automatically transfer - by completing the Change of Ownership Form available at ...."

I may be reading that as a "must do" item rather than optional.