What can UTMA money be used for?
What can UTMA money be used for?
Please note, your adult child may not choose to spend the money how you see fit. It’s now their “money. UTMA assets can be used for college costs, and that’s one common goal. But the funds also could be used to pay for a trip to Europe, a wedding, a honeymoon, a down payment on a home…or a Corvette.”
What does UTMA stand for?
Uniform Transfers to Minors Act
First, the similarities: 529 plans and custodial accounts — such as a UGMA (Uniform Gifts to Minors Act) or a UTMA (Uniform Transfers to Minors Act) — provide ways for parents and others to help pay children’s tuition and other expenses for college, and private elementary and secondary school.
What does UGMA stand for?
The most common trust for a minor is known as a custodial account (an UGMA or UTMA account). The Uniform Gift to Minors Act (UGMA) established a simple way for a minor to own securities without requiring the services of an attorney to prepare trust documents or the court appointment of a trustee.
What is the qualification for CTC?
There are three main criteria to claim the CTC:
- Income: You do not need to have earnings.
- Qualifying Child: Children claimed for the CTC must be a “qualifying child”.
- Taxpayer Identification Number: You and your spouse need to have a social security number (SSN) or an Individual Taxpayer Identification Number (ITIN).
Can I transfer my UTMA to a 529?
You can move money from a custodial account, such as a UGMA (Uniform Gifts to Minors Act) or a UTMA (Uniform Transfers to Minors Act), to a 529 plan. But you can’t do the reverse — transfer or convert from a 529 to a custodial account — without adverse tax consequences.
What is a minor trust account?
“Trusts for minors”, or minor’s trusts, are very specific types of trusts that are used to hold and distribute property or assets to minors. They typically provide instructions that the money or property assets will be held in trust until the minor reaches the age of majority.
What happens to a UTMA account when the child turns 18?
When the minor beneficiary of an UTMA custodial account reaches the age of majority, the custodianship is over, and they get legal control over everything that’s in the account. It’s important to note that the age of majority is slightly different in each state. In most cases, it’s either 18 or 21.
