So much conflicting info. My take is that an account set up as a custodial account can remain that way until the "child" is 21. At that point, the account should come out of custodial status, BUT, the only way to do so would be the custodian directing that or a court order if the child petitions the court.

Other opinions being thrown around are that the age is actually 18 when we should end the custodial status, and another opinion is that at 21, the "child" has legal right to money and the bank must surrender upon request.

Can someone point me to the correct or definitive law or statute?

(760 ILCS 20/2) (from Ch. 110 1/2, par. 252)
Sec. 2. Definitions. In this Act:
(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.

(760 ILCS 20/21) (from Ch. 110 1/2, par. 271)
Sec. 21. Termination of Custodianship. (a) The custodian shall transfer in an appropriate manner the custodial property (to the extent that it has not been used pursuant to this Act) to the minor or to the minor's estate upon the earlier of:
(1) the minor's attainment of 21 years of age with respect to custodial property transferred under Section 5 or 6;
(2) the minor's attainment of majority under the laws of this State other than this Act with respect to custodial
property transferred under Section 7 or 8; or
(3) the minor's death.
(b) To the extent the custodial property is real property or an interest in real property, no conveyance or delivery to the minor or to the minor's estate is necessary to terminate the powers or rights of the custodian upon the minor's attainment of age 21 or 18 years, as the case may be, or upon the minor's death.

The bank should not be releasing funds to an 18-20 year old "upon request." It is up to the custodian to make this decision.

For the complete text see
ILCS 760

Thanks Brian, and reading thru, most if not all of what I believed to be true is validated. That said, I am not clear if this document states the issue of if a Custodial Account under the Illinois Uniform Transfers to Minors Act exists still when the "minor" has turned 21, if our policy that the funds can still only be accessed by the Custodian unless we receive a court order is correct? Do you have an opinion on this?

I concur with your opinion, and we have the same practice at our institution. If the custodian is refusing to release the funds to the account owner due to some family squabble, the last thing the bank wants is to be in the middle. Have the account owner petition the court to order the bank to release the funds once they are of age under state law.
This will take bank error out of the equation and eliminate and potential liabilty for the bank.

Thanks again Brian. And of course, my banking staff has suddenly become amateur compliance experts/attorneys and are telling me that:

1. Some parents try and hide their money in the acct to avoid paying taxes on the interest, but they will lose it all because it now belongs to the minor using the minor's SS# on the acct. Every deposit is an Irrevocable gift to the minor and every withdrawal has to be used for their benefit.
The minor can sue the custodian in court for any withdrawal not used for their benefit. So the personal banker should inform the custodian of these rules before they open the acct.

and

2. Lets say the custodian want to close the account. I assume that the remittance must be made payable to the owner (ex minor) not the custodian…


My opinion is, like an HSA account, it is not the bank's responsibility to monitor how funds are used nor are we obligated to advise them upon opening that the funds need to be used in a specific manner. I don't believe this to be realistic.

What would your opinion be?

"As soon as you start down the dark path, forever, will it dominate your destiny." - Jedi Master Yoda

Specifically, the "dark path" is provide legal advice, tax advice, etc. to your customer because if you get it wrong, and the customer loses money, then you're liable. If your customer has questions about the legal ramifications of establishing a UTMA account, advise them to consult an attorney.

Also, you are correct, the bank does not retain any responsibility to monitor the usage of the funds.

Like any other account, cut the check exactly how the account is title, John Doe, Jane Doe Custodian ILUTMA.

Thanks Brian