What happens to a UGMA account when the minor turns 18?

What happens to a UGMA account when the minor turns 18?

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.

Is Michigan an UTMA or UGMA?

Age of Majority and Trust Termination

State UGMA UTMA
Michigan 18 18
Minnesota 18 21
Mississippi 21 21
Missouri 21 21

Which is better UTMA or UGMA?

The biggest difference between UGMA and UTMA accounts is that UTMAs allow for more types of assets. While UGMA accounts are typically limited to things you find in most IRAs like stocks, bonds, and mutual funds, UTMAs can also hold things like real estate, art, patents, and even cars.

Can the custodian withdraw money from an UTMA account?

Can a Parent Withdraw Money From a UTMA Account? A parent can withdraw money from a UTMA account provided that they’re the custodian of the account, but the custodian can only spend the withdrawn funds on the minor’s behalf and for their benefit.

What do you do with a custodial account when your 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. Ask your brokerage firm what ages apply to your son’s accounts and the steps you need to take at each point.

What is a drawback of using a UGMA or UTMA account to plan for college expenses?

You can move money from an existing UTMA or UGMA account into a 529 college savings plan. The major advantage is that you may be eligible for more financial aid. The major disadvantage is that you’ll lose the ability to use the money for purposes other than education.

Does an UTMA grow tax-free?

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. Any earnings over $2,100 are taxed at the parent’s rate.

Can I take money out of my child’s UTMA?

Under the Uniform Transfers to Minors Act (UMTA), money deposited into a UTMA account cannot be withdrawn for any reason—except by the child at the appropriate age. In the United States, a child’s money does not belong to the child’s parents or guardians.

Can I withdraw from my child’s UTMA account?

Under the Uniform Transfers to Minors Act (UMTA), money deposited into a UTMA account cannot be withdrawn for any reason—except by the child at the appropriate age.

Can a minor take money out of their custodial account?

When funds are transferred into a minor child’s custodial account at a financial institution or brokerage firm, the funds now irrevocably belong to that child. And you can’t take money from one kid’s custodial account and use it to open up or supplement an account for another kid.