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The Uniform Transfers to Minors Act allows for a parent or other adult to create a custodial account for gifts, bequests, and other transfers of assets to a minor. In addition to money, a UTMA account can hold other types of assets for the minor, including real estate, royalties, fine art, and patents. The account can be created either by an individual or by the terms of a will or trust. Although the minor owns the assets in the UTMA account, a custodian manages and controls the account until it terminates.
Previously under Florida law, the UTMA account terminated once the minor turned 21. This past spring, however, the Florida legislature made some changes to the UTMA statute. The new statute permits UTMA accounts to last until the minor reaches the age of 25.
Additionally, the new statute requires the custodian to provide the minor written notice at least 30 days prior—and no later than 30 days after—the minor’s 21st birthday. The written notice must notify the minor that he or she has a period of 30 days after turning 21 to terminate the account and withdraw all the assets. If the minor fails to act within that time period, then the assets will stay in the account until the minor turns 25.
If you are interested in setting up an UTMA account for your child, you may find it helpful to speak with an experienced trusts and estates attorney. Although UTMA accounts are considered to be easier to set up and administer than trusts, there are other important considerations you should keep in mind. For example, custodial accounts are considered to be a child’s assets, which can impact his or her eligibility for financial aid.