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Changing Service Charge for Existing UTMA Accounts

Answered by: 
Ken Golliher

Question: 
Currently our UTMA accounts (we are in Texas) do not have a service charge and they are opened as a minor savings product type. Our disclosures do not state that they will be converted to a regular savings service charge at the age of 18 but we are soon changing our disclosures to read that minor savings will be converted to regular savings when the minor reaches 18. On existing UTMA accounts are we able to change the service charge with a 30 day notice or for the existing accounts and do we have to wait until the minor is 21 to be able to change their service charge? I have received some responses that an UTMA is irrevocable and because the custodian was not aware of the charge at the time, that we could not enforce the change until the minor reached the age of 21.
Answer: 

Your bank is kind of mixing its metaphors:

* UTMA funds are owned by minors, but I've never heard them lumped in with "minor accounts" before. The money may belong to a minor, but nothing changes when the minor reaches the age of majority; you still have a contract with a different adult. There is no logical rationale for changing the fee schedule when the beneficiary reaches a certain age.

* UTMAs cannot accurately be described as "irrevocable," delivery can be made to the child or the funds can be spent on the child at any time. In any case, if a custodian does not like a new fee, he or she could move the deposit to another bank on receipt of a change in terms notice just as anyone else could.

* The age of majority is 18, not 21. (I'm aware the TUTMA mentions age 21, but it is not the age of majority.)

First published on 11/19/2017

Filed under: 
Compliance
Filed under compliance as: 
UTMA
Reg. DD

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