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What happens to UTMA when child turns 18?
When children reach the age of majority, the account can be transferred into their name only with custodian consent. Otherwise, they can remove the custodian from the account at the age of termination.
What happens to a UTMA account when the minor turns 21?
Virtually all states have adopted some form of UTMA that allows you to make gifts to a minor to be held in the name of a custodian during the age of minority. On reaching the age of majority, usually 21 years, the minor is entitled to all assets held in the account.
What is UTMA account age of majority?
Age of Majority and Trust Termination
| State | UGMA | UTMA |
|---|---|---|
| California | 18 | 18 |
| Colorado | 21 | 21 |
| Connecticut | 21 | 21 |
| Delaware | 18 | 21 |
At what age do UTMA accounts transfer in Florida?
25
While age limits can depend on the state, in general a UTMA allows a custodian to wait to hand over the assets until the beneficiary turns 25. Meanwhile, a UGMA requires the funds to be handed over when the minor turns 18.
Who pays taxes on an 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 I cash out a 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.
Is Florida a UGMA or UTMA state?
Florida Statute 710.123 (effective July 1, 2015) now permits UTMA accounts created by an individual, or authorized under a will or trust, to continue until the minor attains age 25.
How old do you have to be to withdraw money from an UTMA account?
Withdrawn funds can only be spent on “extras,” such as a car that can get them to school or to work or a computer necessary for studies. Children legally become adults at either age 18 or age 21, depending on state law. This is the magic number when the custodian of a UTMA account must step aside.
When does UTMA mature before handing to beneficiary?
The UTMA allows for maturity before it is handed to the beneficiary, up to 25 years. The UGMA matures at 18 years. The termination date for each are different as well. While UGMA termination is at 18 years, the termination age for UTMA is 21. Further, UTMA accounts allow parents to donate gifts such as money, stocks, or life insurance.
How old do you have to be to receive gifts under the UTMA?
The UTMA was finalized in 1986 by the National Conference of Commissioners on Uniform State Laws and adopted by most of the 50 states. It allows minors to receive gifts and avoid tax consequences until they become of legal age for the state, which is typically age 18 or 21.
When do you lose control of your child’s UTMA account?
But when your child reaches the age of majority – 18 or 21, or even older, depending on the state – you, as the custodian, lose all control over the account. The funds then belong to your child, and the child is the only one who can decide what happens to the money.