Changing Account When Minor Becomes of Age

Answered by:

Question:

If we are unable to change the way an account is titled, how should we handle an account for a minor when he or she reaches majority?

Answer:

I happen to know this question came from someone with an email address in Pakistan, and I can't claim any knowledge of Pakistani banking law or practices.

If the account were held in the U.S. and were a custodial account under the Uniform Transfers to Minors Act of one of the states, the bank is legally required to accept instructions on the account only from the custodian, even if the minor has reached the age for release of the funds under the applicable statute. The only proper way to handle the matter once the custodian directs that the funds be transferred to the minor is for the bank to issue a check payable as the account is titled -- Custodian Name, Custodian for Minor Name, UTMA (State) and the custodian then indorses the check for transfer to the beneficiary (the former minor). Then the minor can further negotiate the check to open a new account with the same bank or at another bank or otherwise.

First published on BankersOnline.com 4/18/11