In a posting by Ken Golliher dated 11/18/02, Mr. Golliher states that “The minor is the owner of the funds…. But is not entitled to access, regardless of his age.” When we went to www.finaid.org, the author states “the money belongs to the minor but is controlled by the custodian until the minor reaches the age of trust termination.”



Can you help me understand which statement is accurate so we can establish the correct procedure for allowing withdrawals from a UTMA?

Judy B

I believe these mean the same thing. The owner is the minor, but they don't have control over the funds. When they reach the age of majority the custodian will give them the money (or should give them the money) in the account.

I agree with Skittles. The minor is the owner of the funds but does not have transaction authority. The custodian (most states only allow 1 custodian per account) has control of and access to the funds until the minor is of 'age'. Again, depending on state law either 18 or 21.

Both statements are accurate and the second statement is not inconsistent with Ken's statement. They say the same thing - in slightly different manners.

The money belongs to the minor and you use the minor's SSN for tax reporting purposes. If the minor dies before reaching the age at which the minor is entitled to the funds then the money goes to the minor's estate. So long as the minor is unable to access the funds the person appointed as the custodian manages the funds. You need to check your state law on what is the magic age at which the funds must be turned over to the minor. While most states select either the age of 18 or 21 you may be in a state where the age can be extended up to a later age (for example, in California the age can be exteneded up to 25).

Thank you for the helpful advice. The point I'm stuck on is this: Does the custodian have to give the bank permission to release funds at the age of majority (18 in Oklahoma) or can the minor act on his own behalf once he reaches age 18?

The custodian is the only one that can access the account and it is up to them to close the account and give the funds to the minor.

It has always been my practice to advise banks that the custodian must disburse the funds to the minor when the minor reaches the magic age to get the money and that the minor cannot just claim the money. The reasons I have taken this approach is that (1) the custodian is the signer on the account and absent a court order only the signer on the account can disburse funds from the account and (2) the versions of the UTMA law with which I have always dealt call for the custodian to disburse the funds to the minor.

For example, California Probate Code Section 3920 states:

"3920. The custodian shall transfer in an appropriate manner the custodial property to the minor or to the minor's estate upon the earlier of the following [18, a delayed age or the minor's death]."

Check your state's UTMA to see if it has a similar statute. If so, the custodian must transfer the funds to the minor.

Judy B -- Oklahoma has some VERY unique provisions in its UTMA statute. For example, it's the only state, I believe, that includes the ability for the transferor to designate a POD beneficiary that will receive the transferred property if the minor dies before becoming entitled to direct ownership. Take a look at Section 1201 of Title (or Chapter) 58 of Oklahoma Statutes.