Have You Established A Utma For Your Grand Or Great Granchildren?

Discussion in 'Money & Finances' started by Lon Tanner, Jun 25, 2017.

  1. Lon Tanner

    Lon Tanner Well-Known Member
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    I established a UNIFORM TRANSFER to MINORS ACCOUNT (UTMA) for each of my five great grand children shortly after they were born. Instead of presents at Xmas & birthdays I make additional deposits. I did a similar thing for my three (now adult) grand children. My daughter is the Beneficiary Trustee when I croak.










    A Uniform Transfers to Minors Act, or UTMA, account is a way to transfer money to an investment account for a child without having to set up a legal trust. The accounts are established with an adult listed as the custodian for the benefit of a minor child. The custodian manages the investments in the account and takes appropriate withdrawals for the child's expenses until the child reaches a majority age. Specific rules dictate when and for what purpose withdrawals can be taken from these custodial accounts.
    Ownership and Withdrawals

    Any money placed into a UTMA account is the legal property of the beneficiary child. As a minor, a child cannot access the money in the account directly. Rather, the custodian is charged with the responsibility of taking appropriate distributions, which must be for the benefit of the child. The law offers a lot of latitude regarding what is "for the benefit of the child." As long as you can document that what you have spent the money on benefits the child, you shouldn't run into any problems. Music lessons, braces, a computer for school or even a car are allowable withdrawals from a UTMA.
    While the laws differ from state to state, once a minor becomes an adult, he can legally withdraw from a UTMA account. In most states, the age of majority for UTMA accounts is either 18 or 21. When a child reaches adulthood, most custodians will transfer the money from the UTMA to a standard savings or investment account in the child's sole name, with no custodian listed. This facilitates future withdrawals by the beneficiary, as money in a noncustodial savings account can be withdrawn by the legal owner with no restrictions.
    Consequences of Improper Withdrawals

    As a custodian, you can run into serious trouble if you take an improper withdrawal from an UTMA account. For starters, you'd be essentially stealing money from your child, as the money doesn't belong to the custodian but to the child. If the child knows the account exists, this could create an irreparable rift. Beyond that, accessing the money for your own purposes is illegal. While prosecution may be unlikely, the fact remains that you would be open to accusations of theft or embezzlement. Your child, or someone acting on his behalf, could even sue you for the money.
     
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  2. Chrissy Cross

    Chrissy Cross Veteran Member
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    No, they have more money than I do!
     
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  3. Ina I. Wonder

    Ina I. Wonder Very Well-Known Member
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    Hi @Lon Tanner , I admit to not knowing much about UTMA. But, I've seen conservators of their children's inheritance plunder the accounts way before the child ever got to 18. And, although I've never had reason to doubt my offspring, I've never wanted to put that temptation out there to tempt them.

    What I've done for my 9 grandchildren, and so far six great-grandchildren, has been to purchase each of them stock in Center Point Energy, (our local energy company for electric and gas). The only stipulation I've put on their stock is that they can not touch it until they reach 30 years old. :eek:

    I did not tell them about the investment for several reasons. So far only my 33 year old granddaughter has recieved her's, (Of course she immediately told the others. :mad:), and two of my grandsons will be turning 30 on October 2nd. and the 17th. So of course the grandchildren now know that they will be receiving some money. (They do not know how much, and I'm not telling them, mainly because the return on stock varies due to the growth rate at any given time.) I'm pretty sure they do not know about the accounts I set up for the great-grandchildren yet. o_O

    Of course they think it's unfair that they can't touch any part of the funds until they're 30, and they've sure let me know that too. But, as I've told them, its still my money until they receive it, and if I wish, I can always cash them in myself at anytime. :rolleyes: :D
     
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  4. Sheldon Scott

    Sheldon Scott Very Well-Known Member
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    Nope, too many grandchildren and great grandchildren. Plus it's most likely others will come along later. It just doesn't seem fair to leave out those not yet born.
    I think the best way is to leave everything to your children, they, in turn, will leave everything to their children and on and on.
     
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  5. Ina I. Wonder

    Ina I. Wonder Very Well-Known Member
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    That did cross my mind as well @Sheldon Scott, but my biological children have died, and their spouses have remarried. Which is a good thing. They do deserve to find new lives. But, I also know that the new hubbies don't have the same feelings for my grandchildren that their father's did. I've even been asked to set up accounts for their children, as I did for my sons and stepdaughters. :confused:

    I would if I could afford it, but contrary to their beliefs, I'm not made of money. So I decided to take temptation out of the parents reach. If the children decide to use the money to take care of their parents, I have no problems with that, but at least I've safeguarded their inheritance until they are mature enough to handle an influx of cash, or they can leave it in stock form to continue to grow for their own futures. :)
     
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  6. Sheldon Scott

    Sheldon Scott Very Well-Known Member
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    One of our daughters died several years ago @Ina I. Wonder but she will still get a share, which will be split between her three children.
     
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  7. Ina I. Wonder

    Ina I. Wonder Very Well-Known Member
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    @Sheldon Scott , that is the it should be done. I had two biological sons, one adopted son, and two stepdaughters. I just adopted the oldest girl who has called me mom or even mommy since she was two. With those five children I was blessed with 9 grandchildren, and now 6 great-grands.

    My five children all got to go to college, so I feel they have taken care of. So that just leaves their offsprings, and I was lucky enough that I received a prospective from Center Point Energy. I started it off with just $200., and of course it has grown immensely.

    I guess we do what we can, when we can.
     
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