How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lev Your Own Question
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
870116
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

I have 2 utma accounts, each has a different beneficiary.

Customer Question

I have 2 utma accounts, each has a different beneficiary. Can I move the assets from one account to the other and thereby close one of the accounts?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Generally - yes - that is possible - but you should be aware of possible legal and tax consequences.

First of all when you wrote "I have 2 utma accounts" - that sounds as you own these accounts - and that is not true...

If you were having a regular bank or investment account and mane a beneficiary of that account that would be correct - you own that account.

With the UTMA account - the person whom you named as a beneficiary is the LEGAL owner of that account - you do not own the money or investment assets in that account - you are not an owner - but a custodial who manages that account on behalf of the minor owner until he/she reaches the age of majority.
When assets are transferred to the UTMA account - that was a GIFT to the minor - and you cannot simply take it back or treat as your own assets.

As the custodial - you have legal obligations to act in the best interest of the minor. A custodial account is used to hold and protect assets for a minor until they reach the age of majority. If you use assets in the UTMA account for other purposes - that might be a violation of your custodial obligations.

Expert:  Lev replied 1 year ago.

So when assets are transferred from one UTMA account to another - that means a change of the ownership.
Thus if the first account holds some investment assets - these assets should be sold - and that will trigger tax obligations for the owner (who is a minor - not you) if these are appreciated assets.
In additional change the ownership without consideration woudl generally classified as a gift - from one minor to another minor. So depending on the amount - the donor might be required to file a gift tax return.

Please also be aware that the decision to make a gift is made by you - and that fact might be questionable if that is in the best interest of the minor.

Expert:  Lev replied 1 year ago.

I appreciate if take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you will all tax related issues.