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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have cashed in an UGMA Mutual Fund Account for my ...

Customer Question

I have cashed in an UGMA Mutual Fund Account for my grandchildren early ( before they rech 21 yrs) as they need the money now for grade and high school. Iwanted to deposit it my bank and then transfer the money to them, Bank said no. How can I get the money to them? ( Accounts lost money over time)
Submitted: 9 years ago.
Category: Tax
Expert:  Merlo replied 9 years ago.


Where is the money currently and why is the bank telling you it cannot be transferred to your grandchildren?

Are any of your grandchildren 18 years of age or older?

Customer: replied 9 years ago.
The children are under 18.
The money is in three checks from the Putnam Funds.
All my Credit Union said was that they could not cash my 529 checks but the checks had to be placed in another custodial account ( checking /savings)
That's all that I know at this point.
Expert:  Merlo replied 9 years ago.
There is a difference between UGMA accounts and 529 accounts. Which did you originally have?
Customer: replied 9 years ago.
Sorry don't know where I got 529 from.
Accounts are titled U/PA Unif Transfer to M/A
Expert:  Merlo replied 9 years ago.

Hello againCustomer

It sounds like you have a UTMA (Uniform Transfer to Minors Act) account.

The money in this account belongs to the grandchildren, but is controlled by the custodian until the minor reaches the age of trust termination. (The age of trust termination is 18 to 21, depending on the state and whether it is an UGMA or an UTMA. Most UGMAs end at 18 and most UTMAs at 21, but it does depend on the state.) The custodian has the fiduciary responsibility to manage the money in a prudent fashion for the benefit of the minor.

If you have cashed out the mutual funds account, you should establish a new checking account that will give you easier access to the funds.

It is important to title the account correctly. The proper way of titling a custodial account is "[Custodian's Name] as custodian for [Minor's Name] under the [Name of Minor's State of Residence] Uniform Trust to Minors Act". The funds may then be withdrawn by authorization of the custodian but must be used for the benefit of the grandchildren. You cannot directly transfer the funds to their name if they have not yet attained the age of trust termination.

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Thank you.

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Customer: replied 9 years ago.
Reply to Merlo's Post: Can I have my daughter set up the custodial checking account in her name as custodian and place the money there so she can use it for their tuition?
Expert:  Merlo replied 9 years ago.


A successor custodian is normally only appointed upon the current custodian's death or legal incompetence. Outside of those two events, you would need to file a petition in court to legally have the custodXXXXX XXXXXed on these accounts.

Customer: replied 9 years ago.
I appreciate your help. Your were most helpful.
I will use this service again
Expert:  Merlo replied 9 years ago.
Thank you.