UTMA

You may not know what it is, but you might pretty soon if you have children. After my third son was born, my wife and I went to our local bank to open a custodial account for young Zachary. As we were getting our details together, the kind lady asked us which one of us was going to be the custodian. I told her we would like to both be custodians, like the other two kids accounts, because we both handle their money matters. She told us that that is a new state law that prohibits both parents from being custodians because there are many parents that use their kid’s accounts as tax shelters for their own money. I was quite offended that one of us could not have access to our son’s money. So, we decided that my wife will be the custodian, and in the event she dies, THEN I can withdrawal from the account. After I got back home, I called the main branch, and the woman I spoke with told me pretty much the same thing. I then called the office of my State Rep, Shawn Webster. The assistant I spoke with was very helpful. She spoke with the chairman of the finance committee, as well as others and found no state law as such. I finally spoke with a Vice President at the bank, and she explained that it was not a state law, but a federal program that is not mandatory but serves as a guideline for banks to go by. I told her that we use the money for school clothes, etc and she agreed that this is not a very good deal for us. This program is called UTMA and puts the parents in the back seat to the children. In a nutshell, to withdrawal money from the account, it must be specifically intended for the child(education, etc). Here’s the kicker- Say you withdrawal money from the account when the child is a minor for whatever reason, once you beloved child turns 18, he/she can sue you for the money back. I will be opening a traditional custodial account at another establishment because I feel this is way out there.