UTMA Acct Minor of Age

If the custodian has not closed a UTMA account how should this be handled should we close the account or prohibit future deposits?

You don't do anything. If it goes dormant, you escheat it.

Should we stop them from making deposits?

Not sure why you care - the custodian is the only dog in this hunt, unless you think there is some suspicious behavior being conducted thru the account.

So even if the minor is now 28 we should not be concerned?

Well, you always have the ability to just close the account for no reason. If it is bothering you, cut a check payable just like the account is titled and send it to the custodian with a closure letter.

Should we consider a sar since the minor is of age an they continue to make deposits and the deposits at time are more than $5000?

What law has been broken other than the custodian breaching their fiduciary duty? But if you deem it suspicious based on the known facts, then by all means, help yourself. The question then becomes why did it take you 7-10 years to recognize it?

Since it is the custodians responsibility to ensure it follows the UTMA we do not closely monitor these accounts but we came across this one randomly and I was surprised transactions were still going in and out even thought the minor is now 28. It just felt like we should have to step in at some point given this is not what these accounts are for.

Is there any responsibility on our part to make sure the custodian follows through on their responsibility?

Absolutely not. Like I said before, you have no dog in that hunt. You make the check payable in the form of the UTMA account - what they do with it or how they dispose of the money is not your problem.

So we have any liability if the we allow the account to continued to be used? So to keep asking questions

That is a question for your legal counsel.

Has anyone reached out to the custodian, from a customer service perspective, to point out that it might be time to consider disbursing the account? His/her answer will give you a clue about their intentions and purposes for keeping this account so long. This will also provide useful context for your conversations with legal counsel (and possibly your SAR committee).

I'm just going to hang this question out there to provide a little extra context (no need to answer):
If someone came into a branch and requested to open a UTMA account for their 28 year old child, would you allow it?

In that case, the bank should NOT allow it because it's illegal to open such an account for the benefit of an adult and the bank is in a position to prevent it.

Has the "minor" in this sad tale made any claim on the account to the bank? Does the "minor" even know the account exists? If s/he does and the custodian won't hand the funds over, it's up to the "minor" to go to court to get an order for the funds. Other than that, check to see if the account qualifies for surrender as abandoned property. If it does, get rid of it that way.

I agree, John. I would also apply this logic to future deposits in the original scenario, since the bank has knowledge of the beneficiary's non-minor status.

since the bank has knowledge of the beneficiary's non-minor status.

And why is that really? How does the bank really know how old the beneficiary might be? Some States also provide for several dates, like 25 years old in CA under certain circumstances. The Bank is dabbling in something that does not concern them. If you want to close the account, close the account. But starting to act as the UTMA police - it is not worth the trouble. You do something on one UTMA account and not the next one and you might find some no-longer-minor suing the bank for not doing it for them.

Of course, closing the account is indeed to best way to ensure that the bank no longer accepts deposits.

And while I'm not suggesting that any bank start policing their UTMAs, I am underscoring that once the bank gains knowledge of a circumstance requiring a specific response, the bank mustn't go on pretending that is doesn't have such knowledge.

It's interesting how this thread has developed from a simple question into a series of hypothetical what-ifs.

Is there any prohibition against the bank providing information to beneficiary...IF the bene is already aware of the account?

It is not their account - it belongs and is managed by the custodian, unless you have a legal order to disclose information to the minor.

Randy, not trying to be contradictory, BUT you know me, I'm apparently always looking to stir the pot (actually, I'm just trying to garner a proper understanding). So that having been acknowledged, while the account is managed by the custodian, ownership of the funds was transferred to the minor/beneficiary and it is held under their social security number. The Texas Uniform Transfers to Minors Act; specifically, under the Texas Property Code, Title 10, Subtitle A, Chapter 141, Sec. 141.012, Paragraph (b) states: "A transfer made under Section 141.010 is irrevocable, and the custodial property is indefeasibly vested in the minor."

As such, I would contend it IS their account and they should have a right to information.

Please advise.

It may be their funds, but until the custodian transfers the funds to the minor when they reach legal age, it is not their account. It would be no different with a trust account and they were named as a beneficiary. If the beneficiary wants information on the account - their avenue for that is either the trustee and in this case the custodian. I would not be interjecting the bank into the middle of this.

Similarly a disabled adult may own the funds in their estate account, but the court appointed guardian is the only person who has legal capacity to inquire about the account.

Prudent advice.

I had a UTMA account for my granddaughter. After she turned 18 I received a letter from our Account Services department advising me that I needed to close the account or change it into a ITF account. My co-worker also had one but I don't know if they contacted her - her daughter turned 18 about 5 months after my granddaughter.

The bank is treading into an area in which they have no business. This is totally on the custodian to manage the UTMA account and to distribute it accordingly. Plus, what do they mean by transferring it to an ITF account?

That would be worse than leaving it alone. In most states, an "in trust for" account is a "Totten trust" account, the equivalent of a POD account. For such an account, the beneficiary has no current interest in the account and the owner can revoke the ITF or POD designation at any time. At least if it stays in a UTMA account, the beneficiary could go to court and get the court to require the custodian to relinquish the funds.

If the bank changed a UTMA account to a Totten Trust account, the (former) minor could also go to court to get the funds by showing that the funds were originally in a UTMA. The bank erred badly by suggesting a conversion to ITF would be acceptable.