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First world problems

If Goku's dad is like my dad it could take a few months of nagging to get him to make a phone call. Still the whole issue amounts to nothing more than having dad make the call.

BrodyInsurance said:    An UGMA/UTMA is just one type of trust account. These shouldn't be singled out and treated differently than other trusts. UGMA/UTMAs are just standardized so they don't have a cost to them.

Parents need to be able to decide what is best for their children.


If the source of funding for the UGMA/UTMA account is the parent's own funds, then your argument is valid. Also a parent is unlikely to be guilty of fraud when they fund the account themselves : after all if they wanted to spend the money on themselves, they could have done that by not funding the UGMA/UTMA account.

However in many cases when a third party (child employer or grandparent) funds the account they (and in some cases the law) will require the parent to use a UGMA/UTMA account to hold the funds, so the parent has no choice in the type of account used.

If someone just gives money to the kid or if they earn it, you are probably correct that it has to go into an UTMA account. If someone is giving a large sum of money, it is best that it doesn't go into an UTMA account and goes into a trust account with different terms.

The problem with an UTMA account is that one is stuck with specific legal language. Basically, the money can be used for ANYTHING as long as it benefits the child and at age 21 (usually), the account can be re-titled to give the child control. What happens more often for large sums of money is that the gifter wants to limit the uses of the money and wants to turn over control at older ages (such as "25% at age 25, 50% at age 35, 100% at age 45"). In this case, an UTMA should not be used.

I am not sure what should be done about the parent embezzlement problem. The best solution that I can think of if that is a concern is to have a corporate trustee or co-trustees. Sending statements to an 8 year old doesn't seem like it would accomplish anything.

jerosen said:   If Goku's dad is like my dad it could take a few months of nagging to get him to make a phone call.

Your brother showed me how to have my cell phone send your calls straight to voice mail.

You're going to be waiting more than a few months.

BEEFjerKAY said:   jerosen said:   If Goku's dad is like my dad it could take a few months of nagging to get him to make a phone call.

Your brother showed me how to have my cell phone send your calls straight to voice mail.

You're going to be waiting more than a few months.



My dads cell phone doesn't even have the voicemail enabled.

I happened to open UTMA accounts in the past week with Schwab, and noticed that they handle this quite differently. The account registration states when the custodianship ends (e.g. "John Doe, Kids Name UTMA, until age 18") and the Schwab website has a couple forms for the account owner to remove the custodian after that point. e.g. http://www.schwab.com/public/file/P-2064902/APP36766-08-WB.pdf is one option they have for the owner to keep the account open as a regular, non-UTMA, account.

This doesn't help the OP with Fidelity; just pointing out that at least one place figured out a way to not leave the transfer entirely in the hands of the custodian.

jrbirnba said:   I happened to open UTMA accounts in the past week with Schwab, and noticed that they handle this quite differently. The account registration states when the custodianship ends (e.g. "John Doe, Kids Name UTMA, until age 18") and the Schwab website has a couple forms for the account owner to remove the custodian after that point. e.g. http://www.schwab.com/public/file/P-2064902/APP36766-08-WB.pdf is one option they have for the owner to keep the account open as a regular, non-UTMA, account.

This doesn't help the OP with Fidelity; just pointing out that at least one place figured out a way to not leave the transfer entirely in the hands of the custodian.


Good find, jrbirnba. I don't think that I've seen one of those forms before. Like I asked earlier in the thread, "With your two investment accounts, did you need to fill out all sorts of required paperwork? What information was needed and why was it required?" There is all sorts of "know your customer" information that is needed which is what prevents a firm from proactively changing an account title. Thanks for pointing out that I was wrong about it being an automatic necessity for the custodian's signature. In many (most?) cases, the involvement of the custodian may still be necessary because the child may not know where the money is held and if they do won't have the account number.

jerosen said:   My dads cell phone doesn't even have the voicemail enabled.

That's my kind of father.

I'm going through this right now in IL, at 26 years old. My relationship with my father, the custodian, is totally amicable. I have, however, been paying taxes on my UTMA fund for 5 years without control (age of termination in IL is 21). This includes the first two years, in which Fidelity properly transferred the tax filing responsibility from my father to me, though continued to mail tax information to by dad, who didn't know he needed to transfer custody, and who's tax preparer ignored the 1099DIV, since I was now the owner and prepared my taxes separately. So, in the third year, I was hit for back taxes and penalties for the first two, and surprise taxes for that third year. Now, my dad always properly filed the kiddie taxes for the whole 21 years he was custodian of my account, and I had been working and filing taxes since I was 18, so this came as kind of a burn. What really frustrates me now is that I am interested in taking control of the account with regards to the direction of investment (not to liquidate), and have to go through a lot of legal paperwork with no mechanism or support from Fidelity. Had they verifiably notified me of my responsibility, I would have appreciated it. Had they notified my dad of his responsibility, I would have appreciated it. Had they provided support for our own initiative, I would have forgiven the previous two. But now, I'm looking at the cost of restructuring in order to move to a different firm.



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