Ensure the welfare of your children
Custodial accounts are a convenient way to save for the benefit of a minor child while limiting the child's access to the account. Normally, a custodial account is established to save for a specific goal. The Uniform Transfer to Minors Act allows parents or other interested persons to make an "irrevocable gift" to a minor without needing a court-appointed guardian. When the gift is given, which means an UTMA account was opened, the money becomes property of the minor. However, the parent/custodian maintains control over those funds until the minor reaches the age of 21.
| Open to: |
Minors under age 21 who qualify for membership. The Custodian does not have to be a member. |
| Key Features: |
- UTMA account shares belong to the minor.
- Custodian is the only person permitted to transact business on the account. The Custodian (if alive) is responsible for transferring funds to the minor when the minor reaches age 21.
- Funds may be used only for the benefit of the minor.
- At any time a successor custodian can be named by the Custodian. The successor custodian would control the funds upon the death of the current custodian.
- The Social Security number of the minor is reported to the Internal Revenue Service. Tax advice should be secured from the IRS by the Custodian prior to opening this account.
- Dividends on UTMA accounts are considered income to the minor for federal income tax purposes. The information return, Form 1099 INT, will contain the name of the custodian using the minor's Social Security number. For example, "Tom Jones, as custodian for Sophie Jones, a minor, under the VA Uniform Transfer to Minors Act."
|