Compliance Question of the Week
March 27, 2012
March 27, 2012
In a Uniform Transfers to Minors Account (UTMA), when does the minor get access to the funds? At 18? 21? 25?
The first thing to know is that it is up to the custodian to transfer the funds, not the credit union. If the custodian fails to transfer the property, the minor needs to petition the court—not the credit union—to direct the custodian to turn over the property.
The custodian of a UTMA should transfer the funds to the minor or to the minor’s estate upon the happening of a specific occurrence. If the UTMA was created through a gift, or specifically called out in a will or trust, the transfer should occur when the minor reaches 21 years of age. If, on the other hand, the UTMA was created because of the decision of someone acting a fiduciary (like a personal representative) or the decision of an obligor (a person who owes a liquidated debt to a minor), the transfer should occur when the minor reaches 18 years of age. Lastly, the transfer should occur upon the death of the minor if not before (meaning that the minor’s heirs will inherit the property outright, not subject to the custodian’s control).
In addition, when the account is first being set up, the person giving the money can extend the custodianship so that the minor does not have direct access to the funds until he or she reaches 25 years of age (or upon death), with a few exceptions. First, an extension of the custodianship is valid only if the transfer creating custodianship is made on or after July 1, 2007. Further, an extension is not possible if the UTMA is created by a will or trust that specifically provides otherwise. If the UTMA was created by an obligor, the person nominating the custodian gets to choose to extend the custodianship, not the obligor. If there is no custodian, the court establishing the custodianship may extend the custodianship if it determines that doing so would not be contrary to the minor’s interest.
For Oregon UTMA accounts, the custodian should transfer the account to the minor when the beneficiary reaches 21 years of age with respect to custodial property transferred under ORS 126.816 or the beneficiary reaches 18 years of age with respect to custodial property transferred under ORS 126.822.
Interested in learning more?
An upcoming training presented by the Northwest Credit Union Association (NWCUA) promises to help credit unions prepare for and address questions about account administration. The Account Administration Seminar is a one-day training scheduled for April 4 in Federal Way, Wash., and for April 5 in Tigard, Ore. It will cover the key aspects of opening, maintaining, and closing deposit accounts, including the types of account ownership and how to protect credit unions in disputes among owners and other claimants.
The Account Administration Seminar will also discuss the basic rules governing forged and stolen checks and non-sufficient funds, as well as how the key federal regulations apply to deposit account operations. Hal Scoggins, an attorney with the law firm of Farleigh Wada Witt, in Portland, Ore., will facilitate the training. With a practice that focuses on state and federal regulatory compliance, deposit and lending operations, contract and business matters, corporate governance, CUSOs, and all other aspects of financial service delivery, Scoggins has been providing legal advice to credit unions since 1991.
Questions? Contact the Compliance Hotline: 1.800.546.4465, email@example.com.