Comparing UTMA to a Trust for the Benefit of a Minor
This edition of the Koldin Law Center E-Newsletter is part of a series about frequently asked questions comparing legal documents, legal roles, and government benefits.
All prior newsletters are saved on our website. You can read them by clicking here.
We receive many questions from clients and readers of our newsletter asking about the differences between various legal documents, legal roles, and government benefits. In this newsletter we compare a Uniform Transfers to Minors Account (UTMA) to a Trust for the Benefit of a Minor.
You can leave funds to a minor in your Will, in the beneficiary provisions of your Trust, or as part of a beneficiary designation in your bank or brokerage account.
You can set up a bank account and designate your child or grandchild as a beneficiary on your account.
Some example account designations are:
“Tom Jones P.O.D. Daniel Jones” (Payable on Death)
“Tom Jones T.O.D. Daniel Jones” (Transfer on Death)
“Tom Jones I.T.F. Daniel Jones” (In Trust For)
If your child or grandchild is under the age of 18 at the time of your death, the bank will likely turn the account over to a custodian to hold the funds pursuant to the Uniform Transfers to Minors Act (UTMA) until the child reaches age 18. Some banks may permit you to raise the age to 21.
You can also gift funds to your minor child or grandchild now and name yourself or someone else as custodian to age 21.
If you desire your minor child or grandchild to receive the funds later than age 21, such as age 25, then you can leave your child or grandchild a bequest in your Will or Living Trust that directs his/her share to be held in a Trust.
Unlike an account created under the Uniform Transfers to Minors Act (UTMA Account) which must be turned over to the child at age 18 or 21, with a Trust, you can set any age you wish for when the funds must be turned over to your child or grandchild.
Also, with a UTMA account, you can only appoint one custodian to manage the funds. With a Trust, you can appoint multiple Trustees and Successor Trustees.
Also, with a Trust, you can restrict when funds may be spent on your child or grandchild. For example, you could limit distributions to education expenses.
For more information about Beneficiary Trusts, please see our website by clicking here.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care.
The Koldin Law Center, P.C. limits its practice to the specific field of Elder Law which includes estate planning and Medicaid law.
Our attorneys are available to discuss your estate planning options, including the advantages and disadvantages of Revocable Trusts and Irrevocable Trusts, along with other estate planning considerations including a Will, Power of Attorney, and Health Care Proxy.
When the Koldin Law Center, P.C. handles a Medicaid case, we not only handle the entire application process, but we also review asset protection options with our clients. We review with our clients who are already in a Nursing Home options to protect some or all of their assets beyond merely establishing Medicaid eligibility.
We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis.
We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance.
We all share the responsibility for making our family and friends aware of the planning options available to them.
Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness.
Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.
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