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#50945 - 12/27/02 04:29 PM For Benefit Of accounts for minors
Kara S Offline
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Joined: Oct 2002
Posts: 927
Milwaukee, WI
Any help would be much obliged.

I have been trying to research any information on FBO accounts for minors and can not find anything. The bank will be offering FBO accounts for parents who do not want to open up an UTMA account. That is all fine and dandy, but I can't find any information as to what a FBO account for minors is etc. I have searched Bankers' Threads, the launch pad, Bank Focus, all my manuals, etc. No such luck. Could anyone point me in the right direction?

Thank you!
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#50946 - 12/27/02 04:39 PM For Benefit Of accounts for minors
elcinoca Offline
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Joined: Jan 2002
Posts: 537
Elizabeth City, NC
Kara,

Maybe a search of your state's statutes for the words "fiduciary accounts." And maybe BOL search for the same phrase.

MarkB

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#50947 - 12/27/02 04:39 PM Re: For Benefit Of accounts for minors
DeeQ Offline
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Turnpike Exit 10
Kara,
I'm not sure if I understand you. These are not trusts (UTMAs), but that the minors will
have access to the monies at their age of majority? Or, maybe it's like a POD account?
Or, are these people simply earmarking the funds? Who's tax ID # will be used? You may
want to be careful for taxation purposes (like folks trying to hide $$ from IRS?). Please
send more info...Thanks
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#50948 - 12/27/02 04:50 PM Re: For Benefit Of accounts for minors
Kara S Offline
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Joined: Oct 2002
Posts: 927
Milwaukee, WI
That's just it. I don't understand it at all! I think they will be using the parents tax ID#.
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#50949 - 12/27/02 05:04 PM Re: For Benefit Of accounts for minors
LSmith Offline
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LSmith
Joined: Dec 2002
Posts: 703
This may not be what you are looking for, but I recently did research in Mississippi law on this question.

I recently did some research on the opening an account to a "Minor" under the Mississippi Uniform Transfers to Minor's Act.
FACT: NEVER set up an account solely to a minor. A minor is not bound by the law contractually, but being joint with an adult the account is contractually bound by law.
FACT: Under this act a person may transfer money, stock, etc to a minor in order to avoid taxes, trust, or estate problems. The transfer can only be to one child per transfer, (e.g. I cannot transfer $10,000 to an account in the name of Both my grandchild. The funds must be divided per child).
An account can be styled to a minor and/or an adult and have nothing to do with the Gift Act.
If the customers want it to pass through to get the benefits of the Gift Act, it should be styled:
e.g. Tanner Smith, MUTMA (NOT "UGMA" or "UTUGMA")
By Lissie Smith, Custodian
(using Social Security Number of Tanner)
As Custodian that person has complete control of the account to do whatever they want to with the money, EXCEPT to pledge this account for the Custodian's personal loan. This will break their Fidicuary Role.

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#50950 - 12/27/02 05:08 PM Re: For Benefit Of accounts for minors
DeeQ Offline
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Kara,
I'm in NJ, so I'm not sure what they think in Milwaukee...However, if it's the parent's
TIN being used, that means that technically the funds (and any earnings) belong
to the parent. Why don't you just encourage them to use POD instead. It's revocable
so if their child aggravates them, they can remove the designation, and it will pass
directly to the child upon their demise if it remains intact (similar to earmarking
the funds to pass outside of the estate). I hope that helps a little.
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Get your facts first, then you can distort them as you please. - Mark Twain

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#50951 - 12/27/02 05:12 PM Re: For Benefit Of accounts for minors
Kara S Offline
Platinum Poster
Joined: Oct 2002
Posts: 927
Milwaukee, WI
Unfortunetly, If I can't come up with some physical evidence as to why they can't do this then nothing will stop them.
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#50952 - 12/27/02 05:16 PM Re: For Benefit Of accounts for minors
DeeQ Offline
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Turnpike Exit 10
Alright, how about this:
Contact your State Dept of Banking and your regulator and ask them for their advice.
Also, how about Kirchman's phone service, they'll ask your regulator for
you...I wish I could help you.
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Get your facts first, then you can distort them as you please. - Mark Twain

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#50953 - 12/27/02 05:16 PM Re: For Benefit Of accounts for minors
Ted Dreyer Offline
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Ted Dreyer
Joined: Apr 2001
Posts: 2,245
Kara: Look at chapter 705 of the Wisconsin Statutes. Wisconsin has some unusual laws in this area and you might want to check with your institution's legal counsel.

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#50954 - 12/27/02 05:33 PM Re: For Benefit Of accounts for minors
Anonymous
Unregistered

Kara - A couple things. The Wisconsin Bankers had an excellent Account Titling Guide a few years ago that explained good and not so good ways to title accounts. I suggest a call to WBA will help you.

On the issue directly, the UTMA law and the laws governing POD accounts are helpful in that they provide specific guidance as to who is entitled to the money and when. When you venture into FBO accounts and "informal" trusts, you now bear the possibility of disputes of ownership and "intent" of the account. I always look at the worst case scenarios. Example - you have an FBO account and the 18 year old "minor" comes into the bank claiming ownership. The signers on the account are now deceased. Who gets the funds - the estate of the deceased signer or the minor who seems was the intended recipient based upon the title on the account? You may end up in the middle of a legal dispute that will cost you money.

UTMA good - FBO bad.

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#50955 - 12/27/02 05:33 PM Re: For Benefit Of accounts for minors
DeeQ Offline
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DeeQ
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Turnpike Exit 10
Kara,
One more thing, FDIC's insured deposit information may encourage
your deposit ops to revisit the POD issue. Click Here
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Get your facts first, then you can distort them as you please. - Mark Twain

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#50956 - 12/27/02 05:35 PM Re: For Benefit Of accounts for minors
DeeQ Offline
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Turnpike Exit 10
Bravo, well said!
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Get your facts first, then you can distort them as you please. - Mark Twain

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#50957 - 12/27/02 05:49 PM Re: For Benefit Of accounts for minors
Kara S Offline
Platinum Poster
Joined: Oct 2002
Posts: 927
Milwaukee, WI
Thank ANON!!! I actually just emailed WBA, so I'll see what they say. I was looking at the different WI statutes and I can't find anything on FBO accounts.

Thank you Maria! My next step will be calling the FDIC once I get more info!


***RANT WARNING***
WHY CAN'T PEOPLE COME TO THE COMPLIANCE PEOPLE FIRST WITH THE INFORMATION INSTEAD OF LAST?? WHAT A WAY TO END THE YEAR!!!
***RANT OVER****
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#50958 - 12/27/02 05:54 PM Re: For Benefit Of accounts for minors
DeeQ Offline
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DeeQ
Joined: Dec 2002
Posts: 40,746
Turnpike Exit 10
You are welcome! Don't get aggravated, that's how banks operate!
Happy New Year!
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Get your facts first, then you can distort them as you please. - Mark Twain

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#50959 - 12/29/02 06:32 AM Re: For Benefit Of accounts for minors
cbinder63 Offline

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cbinder63
Joined: Dec 2001
Posts: 674
Colorado
Kara - you mean they come to you ..... I thought compliance knowledge of new products/services offered came from finding brochures or seeing ads in the newspaper. Just kidding...
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