Under the Uniform Transfers to Minors Act (UMTA), money deposited into a UTMA account cannot be withdrawn for any reason—except by the child at the appropriate age. In the United States, a child’s money does not belong to the child’s parents or guardians. If you’re thinking about spending your child’s UTMA money, think again.
What does UTMA stand for in SSI category?
South Carolina and Vermont still call this type of account by an earlier name: Uniform Gifts to Minors Act (UGMA) accounts. Both types of accounts are designed to hold money that is given to a minor child. In Mark’s case the UTMA account was opened up when he was a baby to hold periodic cash gifts made by his grandparents.
What is a UTMA account in South Carolina?
UTMA accounts are controlled by state law. South Carolina and Vermont still call this type of account by an earlier name: Uniform Gifts to Minors Act (UGMA) accounts. Both types of accounts are designed to hold money that is given to a minor child.
How old do you have to be to have a UTMA account?
Depending on the state and the circumstances, the account terminates when the child reaches the age specified in the state law, usually either 18 or 21. The balance in the UTMA account is then legally available to the (now adult) child.
When does a custodial UTMA account become owner?
The UTMA structure gives a custodian control over the investments and distributions of an account until the child turns 18 and legally becomes the owner of the account assets. While a UTMA also carries some tax benefits, those benefits are limited.
Can a licensed attorney spend my child’s UTMA money?
A licensed attorney set up several accounts, including a college fund, for his son. When his son went to use it and couldn’t figure out where all the cash was, he sued his dad. His dad not only lost but was carted off to jail for contempt. 3 Look at the case of Carlson v.
Do you have to pay taxes on UTMA income?
However, the amount of income you can shelter from higher taxes comes with some restrictions. For 2015, the first $1,050 of a child’s income in a UTMA is tax-free. The amount from $1,050 to $2,100 is taxed at the child’s rate. Any income earned above those amounts is taxable at the parents’ top tax rate.
