Can you have a custodial account for an adult?
If you are under the age of either 18 or 21, depending on the state, an adult can open a custodial account for you. The person who opens the account would manage it until you reach the age of majority, at which point it is transferred over to you and you are responsible for its management.
What does Utma age 21 mean?
Uniform Transfers to Minors Act
Understanding the Uniform Transfers to Minors Act (UTMA) The UTMA allows minors to receive gifts and avoid tax consequences until they become of legal age for the state—typically 18 or 21 years of age.
How old does a child have to be to have a custodial account?
Under applicable state law (most states have UTMA regimes these days), your child will gain full legal control over the account once he or she ceases to be a minor. This will happen somewhere between age 18 and 21 (in most states it’s 21).
What happens to a custodial account if a minor dies?
If a minor dies before the age of majority, a custodial account is considered part of the minor’s estate and is distributed according to state law. As with any investment, it’s possible to lose money by investing in a 529 plan. Additionally, by investing in a 529 plan outside your state, you may lose tax benefits offered by your own state’s plan.
When do you transfer control of a custodial account?
When the child reaches the age of majority specified by the state, control of the account must be transferred to them. The age of majority varies by state but is generally between 18 and 25. In some cases, it’s called the age of trust termination.
Can a parent withdraw money from a custodial account?
While you can technically withdraw money from a custodial account before your child reaches the age of majority, you can only do so for the direct benefit of the child. That means any purchases must be to help your child, like buying new school clothes or braces.
Under applicable state law (most states have UTMA regimes these days), your child will gain full legal control over the account once he or she ceases to be a minor. This will happen somewhere between age 18 and 21 (in most states it’s 21).
If a minor dies before the age of majority, a custodial account is considered part of the minor’s estate and is distributed according to state law. As with any investment, it’s possible to lose money by investing in a 529 plan. Additionally, by investing in a 529 plan outside your state, you may lose tax benefits offered by your own state’s plan.
Who is the owner of a custodial account?
When it comes down to who owns a custodial account, it depends on how you look at it. Once assets go into a custodial account, they belong to the child whose name is on the account. The adult who opened the account cannot take any money or other assets out of the account unless it is used for the benefit of the child beyond normal living expenses.
When the child reaches the age of majority specified by the state, control of the account must be transferred to them. The age of majority varies by state but is generally between 18 and 25. In some cases, it’s called the age of trust termination.