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#705663 - 03/23/07 03:25 PM
Custodial accounts when kid turns 18
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Diamond Poster
Joined: Oct 2005
Posts: 1,562
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Not sure if this is state specific, but is there any legal requirement to allow access to funds to a kid who turns 18 on an acount that has been titled as a custodial account (Uniform Minors Act), even if the custodian is not present?
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#705680 - 03/23/07 03:32 PM
Re: Custodial accounts when kid turns 18
CubDave
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Joined: Sep 2002
Posts: 13,965
TN
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In Georgia the funds have to be withdrawn by the custodian. The minor was not a signer on the account.
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#705684 - 03/23/07 03:34 PM
Re: Custodial accounts when kid turns 18
Skittles
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Joined: Oct 2005
Posts: 1,562
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I was reading in the Illinois forum, and it appears in Illinois, the Custodian is required to turn the funds over at the age of 21, but it is not clear if as a bank, we are required to initiate that, or if the 21 year old comes in, if we have to give them access without the custodian.
John Burnett answered the question there - John, if you are here, any clarification???
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#705909 - 03/23/07 06:19 PM
Re: Custodial accounts when kid turns 18
CubDave
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Power Poster
Joined: Sep 2001
Posts: 6,029
Sweet Home AL
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I can think of no exception in any fiduciary relationship where it would be appropriate for us to work with the account beneficiary rather than the fiduciary. It is up to the fiduciary to distribute account funds at the appropriate age (age 21 for cash in all of the states I have researched for UTMA purposes, other types of property held in UTMA can vary).
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#706018 - 03/23/07 07:11 PM
Re: Custodial accounts when kid turns 18
BrendaC
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Joined: Oct 2006
Posts: 14,390
Cheeseheadland
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So then, what do you do if the fiduciary is either no longer capable, or willing, to follow thru once the child reaches 21?
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#706143 - 03/23/07 08:10 PM
Re: Custodial accounts when kid turns 18
#Just Jay
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Joined: Sep 2001
Posts: 6,029
Sweet Home AL
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The child can get an attorney and take legal action to get their funds. The bank should not become involved in the issue. It is not our place to determine ownership of funds.
If an UTMA custodian dies or becomes incapable of handling an account, your state law should provide direction on how to identify a successor custodian. As I recall, a child that has reached age 14 can appoint their own custodian in Alabama.
If we become aware of a dispute over funds, we generally contact the account owner (or fiduciary), explain that the bank needs to know the disposition of the funds. If the owner does not appear to be willing to take appropriate steps, we notify them that we are contacting our bank counsel to interplead funds to the court and they can fight it out there. This usually happens when two account owners (or business owners) are fighting over disposition of funds in an account.
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#706398 - 03/25/07 09:56 AM
Re: Custodial accounts when kid turns 18
BrendaC
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Posts: 21,939
Next to Harvey
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Only to reiterate Brenda's response, the bank's contract is with the custodian, not the child. It is the responsibility of the child's guardian or the child to enforce the right to delivery of the funds. When trusts, estates, guardianships, custodians, etc. deposit funds in a bank, there is no implied responsibility on the bank that it should assume routine ministerial functions; e.g. delivering funds belonging to third parties.
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#707265 - 03/27/07 04:57 PM
Re: Custodial accounts when kid turns 18
RayLynch
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Joined: Oct 2000
Posts: 40,086
Cape Cod
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I am with all of you who want to keep the bank out of the middle on this. It is most definitely the custodian's responsibility. Just to illustrate -- some states follow the model UTMA, which provides for release of custody at age 18 or at age 21, depending on who transferred the property to the custodianship and for what purpose. The financial institution is almost always ignorant of the source or purpose of these transfers, so it could very well shoot itself in the foot if it tried to promote the minor's cause by permitting access to the account.
If your state provides for a uniform age, and you transfer the funds to the (former) minor's control without involvement of the custodian, you incur some risk. That risk may be minimal, unless there is some other party with a claim on those funds. Consider your risk, for example, if the (former) minor has been declared an incompetent individual and you aren't aware of it.
Stick to your knitting, and await a court order, or interplead the funds to the court as BrendaC has suggested.
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#707359 - 03/27/07 06:09 PM
Re: Custodial accounts when kid turns 18
John Burnett
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#707761 - 03/28/07 12:20 AM
Re: Custodial accounts when kid turns 18
CubDave
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Joined: Oct 2006
Posts: 14,390
Cheeseheadland
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Interesting read.
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