The custodian of the UTMA has died leaving no successor custodian. The beneficiary of the account is 28 years old. I don't read anywhere that we can just hand over the funds to the now adult child. That some sort of transfer to them has to happen. I understand they can petition the court to have the account transferred to them. I am wondering if we couldn't have the Personal Representative for the estate of the custodian act on behalf of the custodian and transfer the funds to the now adult child?

Your state UTMA law would define what requirements the account owner would have to meet to obtain the funds. As your correctly state, this most likely will require that they petition the court. The decedent's estate does not own funds the decedent controlled in a fiduciary capacity and the personal representative would have no authority over this account.

I understand they can petition the court to have the account transferred to them.

Yes


I am wondering if we couldn't have the Personal Representative for the estate of the custodian act on behalf of the custodian and transfer the funds to the now adult child?

No

I agree with Brian and Randy's comments. I have a suggestion in case your state's version of UTMA doesn't provide a solution short of having the minor/now adult petition the court for an Order authorizing the distribution directly to them.

Check your Account Agreement to see if it contains a provision that when the minor reaches the required age for distribution, your bank is authorized to disburse the funds directly to the minor/now adult. Some banks have this provision in their Account Agreement to deal with this particular situation.

I still would not do that, even if my depositor's agreement had some such boilerplate language without clearing it with legal counsel. Such a clause within a depositor's agreement does not supersede State law. The Bank has no dog in this hunt.

b. Once Age of Majority is Attained

In the month the minor attains the age of majority under applicable State law, all UTMA property becomes available to him or her and is subject to income counting. The UTMA property becomes subject to resource counting the following month.
REMINDER: Field offices should check regional POMS supplements to SI 01120.205 to confirm the legal age of majority in their respective States.


While as per the SSA the funds belong to the Adult minor it does not state how the adult minor should obtain it as mentioned I would consult state law and legal council.


https://secure.ssa.gov/poms.NSF/lnx/0501120205

SSA is just opining about whether they will take the UTMA funds into account in deciding whether the minor is entitled to benefits. (Their term is "resource counting.")

None of their observations have anything to do with whether the bank can take it on itself to deliver the UTMA funds to the minor. It's purely an issue of state law.

As noted, the model statute would require the minor (now adult) to take action, not the bank. The bank is nothing but the depository institution; it has no fiduciary responsibilities. When bankers get "proactive" about taking over fiduciary relationships in which they are not a party I ask them "If the personal representative does not settle an estate fast enough are you going to take that over too?"

Here is what I found in the WI state statutes

If a custodian is ineligible, dies or becomes incapacitated without having effectively designated a successor and the minor has attained the age of 14 years, the minor may designate as successor custodian, in the manner prescribed in sub. (2), an adult member of the minor's family, a conservator of the minor or a trust company. If the minor has not attained the age of 14 years or fails to act within 60 days after the ineligibility, death or incapacity, the conservator of the minor becomes successor custodian. If the minor has no conservator or the conservator declines to act, the transferor, the legal representative of the transferor or of the custodian, an adult member of the minor's family or any other interested person may petition the court to designate a successor custodian.
So it appears that after the age of 14 and in the event of the death of the custodian with no successor custodian appointment, the 14 year old or older may appoint a successor custodian.

I also found this:

A custodian who declines to serve under sub. (1) or resigns under sub. (3), or the legal representative of a deceased or incapacitated custodian, as soon as practicable, shall put the custodial property and records in the possession and control of the successor custodian. The successor custodian, by action, may enforce the obligation to deliver custodial property and records and becomes responsible for each item as received

So it appears that a Personal Representative could act on behalf of the deceased custodian and appoint a successor custodian.

Or the adult beneficiary may petition the court.

No matter what though, it appears that giving the account directly to the adult beneficiary is a no no and a successor custodian must be named to make the transfer from the WUTMA to the beneficiary.

Thank you for all your input.

It does not say that the personal representative can appoint a new custodian...

The adult beneficiary, now over the age of 14, can appoint a new custodian from the list provided in the statute and that custodian could make delivery.

And that involves more than Joe (used to be minor) showing up at the bank with Jim and saying he has appointed Jim. Joe needs to go talk to legal counsel and execute the proper documents officially appointing a successor.

The language of our state is similar to WI.

The part that confuses me is that it refers to a minor who has attained 14 years of age is able to designate a custodian. But once they are 21 in our state, they are no longer considered a minor. The language doesn't say if the beneficiary has attained 14 years of age. Our statute also states that the custodianship is terminated at age 21 (or 25 depending on section the transfer of gift was under).

So if the beneficiary is older than 25, why would it be necessary for them to appoint a custodian to transfer the funds to them or petition the court?

The model act and most state laws require the custodian to transfer the property to the minor turned adult or the minor's estate when the custodianship terminates. There isn't a provision in the model act and most state laws which gives the minor turned adult the right to obtain the funds directly from anyone holding the custodianship property when he/she reaches the requisite age to receive the property. If the law requires a custodian to transfer the property and if there is no custodian, then either a successor custodian must be appointed or a court order obtained to authorize the disbursement to the minor turned adult (unless some other procedure is available under applicable law or the account agreement which permits the direct distribution to the minor turned adult).

Here is the language in WI statute 54.892 which states the custodian must disburse the property:

54.892 Termination of custodianship. The custodian shall transfer in an appropriate manner the custodial property 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 s. 54.860 or 54.862;
(2)The minor's attainment of 18 years of age with respect to custodial property transferred under s. 54.864 or 54.866; or
(3)The minor's death.