At what age do UTMA accounts transfer?

At what age do UTMA accounts transfer?

At what age do UTMA accounts transfer? Generally, the UTMA account transfers to the beneficiary when he or she becomes a legal adult, which is usually 18 or 21 (age 18 in both Kansas and Missouri).

Can you transfer UTMA to another child?

There is no ability to transfer a UGMA or UTMA account to another child or to change beneficiaries. You are not supposed to use a UTMA-529 or UGMA-529 account conversion to change the beneficiary either because that would equate to giving your child’s money to someone else.

What happens to a UTMA account when the 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.

Can you transfer money from UTMA?

The Uniform Transfers to Minors Act (UTMA) allows gift givers to transfer money – or other gifts like real estate or fine art – to a minor child without the need for a guardian or trustee. The age is designated by the state statute where you set up the UTMA account.

Who pays taxes on a UTMA account?

Because money placed in an UGMA/UTMA account is owned by the child, earnings are generally taxed at the child’s—usually lower—tax rate, rather than the parent’s rate. For some families, this savings can be significant. Up to $1,050 in earnings tax-free. The next $1,050 is taxable at the child’s tax rate.

Can parent take money out of UTMA account?

A parent can withdraw money from a UTMA account provided that they’re the custodian of the account, but the custodian can only spend the withdrawn funds on the minor’s behalf and for their benefit.

Is UTMA a good idea?

UGMA / UTMA accounts can be good for some things, bad for others. UTMA (Uniform Transfers to Minors Act) has replaced UGMA (Uniform Gifts to Minors Act) in most states. The main “upgrade” is greater flexibility – UGMAs only hold securities, UTMAs can hold securities and others assets, such as real estate.

What is the difference between a UTMA and UGMA account?

An UGMA account, the original custodial account, can hold financial assets such as individual stocks, bonds, mutual funds, index funds, cash, and insurance policies. An UTMA account can hold all of the same assets as an UGMA account. But it can also hold physical assets such as real estate, fine art, and more.

What can UTMA money be used for?

By opening an UTMA or UGMA, you can invest money and watch your child’s savings grow. Your child can use the funds to pay for college as they might with a 529 plan, but they can also spend the money on expenses other than education.

Do I have to file taxes for UTMA?

No, you have no reporting requirement as the custodian. The income from UTMA accounts is the named child’s income and is reported under his/her Social Security number. Your dependent child’s income from investments is taxable income and must be reported if it exceeds the filing threshold.

How much money can you put in a UTMA account?

Investors who want a tax-advantaged investment Anyone can contribute up to $15,000 per child each year free of gift-tax consequences ($30,000 for married couples). This amount is indexed for inflation and may increase over time. Because contributions are made with after-tax dollars, a deduction cannot be taken.

Does UTMA grow tax free?

Because money placed in an UGMA/UTMA account is owned by the child, earnings are generally taxed at the child’s—usually lower—tax rate, rather than the parent’s rate. For some families, this savings can be significant. Up to $1,050 in earnings tax-free. Any earnings over $2,100 are taxed at the parent’s rate.

How old do you have to be to open an UTMA account?

Alabama and Nebraska set the age of majority to 19 and Mississippi sets it at 21. See the chart below to compare the age of majority and UTMA account age of majority in every state. UTMA accounts are custodial accounts, meaning that a custodian manages the funds in them until the minor comes of age.

How does the Uniform Transfers to Minors Act ( UTMA ) work?

Uniform Transfers to Minors Act (UTMA) The UTMA offers all States the expansive approach some of them had already taken and makes a variety of other improvements over the UGMA. Under the UTMA, any kind of property, real or personal, tangible or intangible, can be transferred to a custodian for the benefit of a minor.

When does a minor become a custodian under UTMA?

Under the UTMA legislation: a donor makes an irrevocable transfer of money or other property to a minor; the transfer, plus any income it generates, is under the control of a custodian until the minor reaches the age of majority established by State law;

Can a gift be made to a minor under UTMA?

Under UGMA, only gifts of cash or securities are permitted. The UTMA covers not only outright gifts, but also other transfers, such as payment of debts owed by a third party to a minor and transfers of property from trusts or estates.