How do you name a custodian for a minor beneficiary?
When asked to name a custodian, you list your older sister because she would be your child’s guardian if anything happened to you. Your sister would then be in charge of financially managing the life insurance proceeds until your child reaches the age of majority.
Can a contingent beneficiary be under 18?
If the primary beneficiary is the spouse, the contingent beneficiary may be a minor child. Consideration needs to be given as to who will manage the assets until the child reaches 18 or 21 years.
Who is the custodian of a UTMA account?
With a UTMA account, you name a custodian – often another family member – to hold the funds for the minor until the minor reaches a designated age.
How old does a child have to be to open a UTMA account?
Florida, for instance, allows the custodial property to remain in a UTMA account until the minor reaches age 25 as long as the person making the gift expressed that intent. However, many states do not offer that flexibility. If the child is not able to handle the funds at the designated age, problems can arise. Dismantling a UTMA is hard.
Can a divorced parent take control of a UTMA account?
Not even the custodian may take funds from the account without approved access and processes satisfied by the institution and state laws. Thus, if the other parent, whether still married or divorced, takes control of the account and attempt to use or transfer the funds, he or she may commit a crime that is punishable by law enforcement.
How does a designated custodian work for a minor?
The designated custodian is given the discretion to make distributions for the minor’s welfare. At Age 21, the account must be fully paid to the child. This arrangement avoids probate, avoids a minor’s estate and is not subject to creditors. However, the arrangement is not flexible or customizable like a trust.
How old does a child have to be to have a UTMA account?
In some states, your child could reach the age of majority at 18, but would not be able to recieve the full UTMA funds until several years later at age 21. While the custodian owns the account, the money may be invested into assets such as mutual funds and stocks.
Can a UGMA account be used as a custodial account?
UGMA/UTMA brokerage accounts can make sense when saving and investing on behalf of a minor, but there are some important things to know about the accounts. Money put into a custodial account belongs to the beneficiary—it’s called an irrevocable gift.
Can a child be a beneficiary of a custodian account?
Thanks to the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA), money in the custodian account, regardless of your child’s age, can be used for some of your child’s eligible expenses. What constitutes eligible expenses depends on state law.
When to name a custodial account for a minor?
Do designate a custodial account or trust created by you (or by your will) for the benefit of the minor as the beneficiary of life insurance policies, retirement plans, IRAs, etc. For custodial account to age 21, use this language: [Custodian’s name] as Custodian for [Name of Minor] under the Pennsylvania Uniform Transfers to Minors Act