Custodial Account Question

[Anonymous]

Anonymous wrote:Op can you ask/tell your daughter that you would like your name added as a joint owner the same time the account transitions to her from the custodial title?

Technically she could say no, as the money is hers. But many kids would not only be ok with this, but would welcome it. It could be overwhelming to suddenly have significant money when you’re a young adult.

As the second joint owner, you can view online, request statements, withdraw funds. You and dd can agree together how hands off you’ll be

This is what we did

[Anonymous]

You can transfer a chunk out before her birthday. $15k per year to you and DH. So 30k this year and 30k in January. I had custodial accounts for my kids (not as much $) and nothing changed as they hit 18 or 21. I still had access to the accounts till I closed them at college grad time.

[Anonymous]

OP here, you were all wrong. I called Vangaurd back, got the correct person (5th time must be the charm), and transferred the funds to new accounts in my name only. The funds are still for our kids, they just won't be getting it all when they turn 21

[Anonymous]

Was only possible because they are still under 21

[Anonymous]

Anonymous wrote:Was only possible because they are still under 21

You are technically in breach of your fiduciary duty as custodian of those funds. And unwinding a completed gift for tax purposes.

[Anonymous]

Anonymous wrote:OP here, you were all wrong. I called Vangaurd back, got the correct person (5th time must be the charm), and transferred the funds to new accounts in my name only. The funds are still for our kids, they just won't be getting it all when they turn 21

It it was a utma account, we are not wrong. The person you spoke to is and that person helped you breach your fiduciary duty. The fact that they allowed it does not change the fact that you breached your duty. It was an irrevocable transfer that you unlawfully revoked.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here, you were all wrong. I called Vangaurd back, got the correct person (5th time must be the charm), and transferred the funds to new accounts in my name only. The funds are still for our kids, they just won't be getting it all when they turn 21

It it was a utma account, we are not wrong. The person you spoke to is and that person helped you breach your fiduciary duty. The fact that they allowed it does not change the fact that you breached your duty. It was an irrevocable transfer that you unlawfully revoked.

Agreed! My financial guy was very clear that once an UTMA was established it can’t be unwound.

[Anonymous]

Never mind all that. How broke are you or how crazy spender is your child that you can't just hand over the money?
DC is nine and will have quarter or a million dollars in his account by next year. It's not my money and I will follow the rules as he becomes an adult.
We will be keeping an eye on his investments together. Perfect time to learn and then hand it all over. Hopefully DC will still check with me before doing anything rash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Was only possible because they are still under 21

You are technically in breach of your fiduciary duty as custodian of those funds. And unwinding a completed gift for tax purposes.

This is correct. You have violated your fiduciary duties.

The person that helped you do this is also in legal jeopardy.

[Anonymous]

You crimed!

[Anonymous]

Anonymous wrote:Never mind all that. How broke are you or how crazy spender is your child that you can't just hand over the money?
DC is nine and will have quarter or a million dollars in his account by next year. It's not my money and I will follow the rules as he becomes an adult.
We will be keeping an eye on his investments together. Perfect time to learn and then hand it all over. Hopefully DC will still check with me before doing anything rash.

You've hit the nail on the head. Child does have some issues (like drugs or gambling - but are getting by), and we want the money we put in the account to go for grad school or a down payment on a house, or something similar, not wasted. The letters UTMA are nowhere on any of the statements, so perhaps it was a different kind of account

[Anonymous]

That is a tough situation. I get when parents freak out about giving a young adult a larger sum of money that may enable a drug habit. FYI, as long as you use the funds for their benefit now that you have withdrawn them, I would think that would be okay.

[Anonymous]

Gift tax?

[Anonymous]

Anonymous wrote:Gift tax?

The transfer appears to be illegal, but if the $$ was in the child’s name and the transfer were appropriate for some reason, if it was over $17,000 (or $34,000 if to both parents), I assume it would trigger a need to file a disclosure with the IRS and the amount would be credited against the child’s total estate exemption amount.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Gift tax?

The transfer appears to be illegal, but if the $$ was in the child’s name and the transfer were appropriate for some reason, if it was over $17,000 (or $34,000 if to both parents), I assume it would trigger a need to file a disclosure with the IRS and the amount would be credited against the child’s total estate exemption amount.

How do the parents gift themselves money that isn’t theirs? It belongs to their daughter.