How is an UTMA account titled?
When establishing a UTMA or UGMA, the donor designates a custodian (often himself) and a beneficiary (one per account). The account is titled: “(Custodian’s Name) as custodian for (Minor’s Name) under the (State of Residence of Minor) Uniform Transfer to Minors Act”.
Can parent take money out of UTMA account?
Parents can take cash out of a UTMA or a UGMA account as long as the money is spent for the benefit of the child, who is the account’s beneficiary.
Who can be a custodian on an UTMA?
If you choose to use UTMA, you will specify a custodian who will manage property. When the young person reaches a state-determined age – usually 21, but sometimes as young as 18 or as old as age 25—he or she will receive the property outright. (See below for your state’s age or age range.)
Can you change the custodian on a UTMA account?
Gifts made to UTMA accounts are irrevocable, so you can’t change your mind and take them back. The custodian of the account, who may be the same person who created it or another adult relative, is required to manage it in the minor’s interest.
Can grandparents open UTMA account?
Grandparents, other family members, and even friends can also open a custodial account for a minor. There are two main types of custodial accounts: the Uniform Gift to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA). The largest difference between the UGMA and UTMA is that the UTMA covers more assets.
Can UTMA be used to buy a house?
An UTMA or UGMA is an investment account that officially belongs to your child. The rules surrounding how you spend money from an UTMA/UGMA are pretty flexible. You can invest in the market with an UGMA; you can also put real assets like a house into an UTMA.
Who pays taxes on custodial brokerage?
What are the tax considerations for custodial accounts? Any investment income—such as dividends, interest, or earnings—generated by account assets is considered the child’s income and taxed at the child’s tax rate once the child reaches age 18.
What happens to UTMA when custodian dies?
If the custodian of the account dies, a new custodian must be named. The new custodian is appointed under the provisions of the applicable state UTMA or UGMA listed on the account. Typically, under the applicable UTMA/UGMA statute, the custodian may name a successor upon death.
Who pays taxes on a custodial account?
The Child May Have to File Tax Returns and Pay Taxes
Any income from a child’s custodial account belongs to the child. If that income exceeds certain thresholds, you’ll need to file a separate federal income tax return for the child using Form 1040, 1040A, or 1040EZ.
WHO reports UTMA income?
Any income from the custodial account must be reported on the child’s tax return and is taxed at the child’s rate. The parent is responsible for filing an income tax return on behalf of the child. Children aged 14 and older must sign their own tax returns.
Who owns a custodial bank account?
But most people use the term to mean a financial account that an adult controls for a minor, typically a child or grandchild. This adult acts as the account custodian — that’s why the name “custodial account” — for the minor, who is the beneficiary and technical owner of the account.
Can UTMA be used to buy a car?
In other words, a parent can’t use UTMA funds for groceries, clothes or child-support payments, but can feel free to spend the money on treats like after-school classes, a trip to Europe or even a car, says Kaye Thomas, a tax lawyer and founder of Fairmark.com, a Web site dedicated to tax issues.
Can a child have two UTMA accounts?
That said, you can get around this limit by setting up multiple ESAs for the same beneficiary if you wish. Another category of custodial accounts are the Uniform Transfer to Minors Act (UTMA) account and the Uniform Gift to Minors Act (UGMA) account. … You can also open a UGMA account if you wish.
How do I report a UTMA on my taxes?
You’ll have to file a tax return in the child’s name to report earnings in a UTMA. Taxes can be calculated using Form 8816, “Tax for Certain Children Who Have Unearned Income.” You can elect to report the child’s income on your own tax return instead, but you’ll lose the benefit of taxation at the child’s rate.
Do I have to file taxes for UTMA?
As the adult custodian or a UGMA or UTMA account, you’re responsible for reporting any taxable gains or taxable income. If a child’s custodial account has generated unearned income, you’ve got to report it to the IRS using Form 8615.
What happens to UTMA when child turns 18?
When the minor beneficiary of an UTMA custodial account reaches the age of majority, the custodianship is over, and they get legal control over everything that’s in the account. It’s important to note that the age of majority is slightly different in each state. In most cases, it’s either 18 or 21.
Does TIAA have custodial accounts?
This form is to be used to re-register custodial accounts and not used for any other type of account. … The new account owner will be issued a new account number and the funds transferred. The new account owner must complete the TIAA-CREF Funds Account Application* for UTMA/UGMA accounts to consent to the account terms.
How do I open a custodial account for stocks?
To open a custodial account, all you need is basic information about your child: name, birthday and social security number. Once it’s set up, you manage all the action in the account, which revolves around deposits and deciding which assets to invest in.