We have a couple of UTMA accounts that are classified as inactive. As a courtesy to our customers, we send them a dormant notice that asks them if the want make a deposit, transer the funds or close the account. This prevents the money being escheated to the state. On these particular ones, the custodian lives out of state. (We are in Ohio.) The children are 18 and 21. The custodian would like a cashiers check mailed to close out the accounts. We have verified signatures with signature card. Do we make the check out to the custodian and child or just the custodian? From what I have read, the custodian must close the account and give the funds to the minor. Can anyone help? Thank you in advance.

You may make it out like this;

Jane Adult-Custodian
F/B/O Bobby Minor-UTMA

Yes, the custodian must give over the funds to the minor

It may vary based on your state, but in Texas it would be the same as above

Thank you, but what does F/B/O stand for?

for the benefit of

Thank you so much for all the help!

We have some UTMA accounts that are being 'kicked back' by the IRS due to missing/incorrect SSNs. The accounts are styled as "John J Doe as custodian for Tom T Doe under the UTMA". The SSN used is that of the minor (Tom T Doe).

Is anyone else having this issue? Or are you styling it with the minor's name first so that the SSN matches the first name on the account?

You have to work with the capabilities of your system, many of which are able to generate 1099-INT reporting with a designated name line rather than the first line of the standard name and address setup. If you're stuck using the first line of name and address for 1099's though, you'll need to get that kid's last name into the first line.

That may mean the account lists the minor first. But be sure to retrain your staff to watch for UTMA accounts so they don't assume it's cool to pay out to the first-named individual.

Thanks John. I'll give a shout to our vendor to see how they construct the name given to IRS and if there are any alternatives. I do recall when I did the school books that we could edit the 1099 to indicate how the name should be presented to IRS. I appreciate the tip on the pay out.

We would style this:
Tom T Doe
minor by John J Doe, custodian under UTMA

We have always set up the accounts in the minor's name and TIN (since they "own" the funds), and it would appear as above.