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#2250873 - 03/19/21 01:34 PM KYUTMA Tax Refunds
Banker*23 Offline
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Situation=Dad is custodian on a KYUTMA account for his adult son....account has never been changed due to the dad's request....son's tax refund is direct deposited into the account. The refund shows son's name AND his wife.

We are trying to contact dad and explain that adult son and his wife need their own account. We are concerned because this will not allow son & wife to have access to their money. We do not want to reach out to the son due to privacy reasons since he is not authorized on this account.

What are thoughts on allowing this deposit to remain vs. returning it?

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#2250874 - 03/19/21 01:41 PM Re: KYUTMA Tax Refunds Banker*23
DeeQ Offline
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OK, tell me if I am wrong here (it may be a state issue). In NJ, when the minor reaches the age of majority, he/she can come in and claim the account. UTMA accounts are for minors only.

You may want to check with counsel on the legality of the account.
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#2250875 - 03/19/21 01:44 PM Re: KYUTMA Tax Refunds Banker*23
DeeQ Offline
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And, I would cut a check for the ACH amount and send it on to the son & wife, as they may be in need of it. Curious how the IRS got the account number for the direct deposit.... that information is generally provided by the filers (I would presume son and wife).
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#2250876 - 03/19/21 01:45 PM Re: KYUTMA Tax Refunds Banker*23
Banker*23 Offline
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Yes, it does vary by state, it Kentucky, the Custodian has control and although we send letters and encourage them when the minor turns 18, they can technically have this account set up this way until the child is in their 30's UNLESS the child goes to court and we receive an order to release it.
Last edited by Banker*23; 03/19/21 01:46 PM.
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#2250877 - 03/19/21 01:48 PM Re: KYUTMA Tax Refunds Banker*23
Banker*23 Offline
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I am assuming it would have been provided by the husband at wife upon filing taxes, hoping they will just open their own account and dad can give them their money.

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#2250894 - 03/19/21 03:44 PM Re: KYUTMA Tax Refunds Banker*23
rlcarey Offline
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I am not sure how they can have the account set up until the kid is thirty - you need to visit with your legal counsel.

KY Statutes: 385.202 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 age eighteen (18) with respect to custodial property transferred under KRS 385.042 to 385.072; or

(2) The minor's death.

Effective: July 15, 1986
History: Created 1986 Ky. Acts ch. 182, sec. 20, effective July 15, 1986
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#2250904 - 03/19/21 05:24 PM Re: KYUTMA Tax Refunds Banker*23
Banker*23 Offline
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What I am referring to is that we can't do that for them. The custodian must request this from us and if the custodian choses not to, then we can't force them to unless the minor goes to court and issues us this guidance. We can inform them and explain how KYUTMA works but we don't force them to close them upon 18. Is this a normal practice for some banks to MAKE them close and turn over the funds?

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#2250906 - 03/19/21 05:27 PM Re: KYUTMA Tax Refunds Banker*23
rlcarey Offline
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The bank has no dog in this hunt in any State.

I was just going on this statement that you made "They can technically have this account set up this way until the child is in their 30's"

"Technically" they cannot do that. They would be violating the law.
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#2250908 - 03/19/21 05:33 PM Re: KYUTMA Tax Refunds Banker*23
Banker*23 Offline
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Ok, yes agreed, they are not supposed to, but if they don't do anything about it and don't close out the account and do what they are supposed to then it is possible the child can be married with their own kids.

The original question was what are the thoughts of the tax refund being direct deposited into an account that husband and wife can't even get to. Obviously, we want to attempt to call them and work through this but with no luck, would you allow the deposit to post to the KYUMTA account?

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#2250910 - 03/19/21 06:05 PM Re: KYUTMA Tax Refunds Banker*23
rlcarey Offline
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Galveston, TX
It depends on if you have the means to catch it. Some banks do and some banks do not. I personally would not allow a personal deposit coming in through ACH to be placed into a fiduciary account if I could help it.
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