A Uniform Transfers to Minors Act (UTMA) account is a custodial account established for the benefit of a minor. The property in an UTMA account belongs to the minor but is controlled by a custodian until the UTMA account terminates. An UTMA account created by an individual, or pursuant to the terms of a will or trust, terminates upon the minor attaining age 21. If a decedent’s will or trust did not specifically provide for the creation of an UTMA account, one may still be established but it will terminate when the minor attains age 18.
Florida Statute 710.123 (effective July 1, 2015) now permits UTMA accounts created by an individual, or authorized under a will or trust, to continue until the minor attains age 25. There is, however, an important notice requirement the custodian is provide to the minor at least 30 days before, and not later than 30 days after, the date upon which the minor attains age 21. The written notice is to inform the minor that he or she has 30 days (or more than 30 days if the notice so provides) after attaining age 21 to terminate the UTMA account and withdraw all of the funds. If the minor does not act within the time frame provided in the notice then the assets remain in the UTMA account until the minor attains age 25.
Parents or grandparents may be more inclined to create an UTMA account during their lives or as part of their dispositive provisions in a will or trust if they know an UTMA account is likely to hold the beneficiary’s assets until age 25. An UTMA account is generally regarded as being easier to establish and administer than a separate trust drafted by an attorney. Remember, however, even under the new law a minor beneficiary will still have at least a 30-day window to withdraw all of the assets of an UTMA account at age 21. It should be explained to the minor beneficiary that concerns such as asset protection, focusing on an undergraduate or graduate degree from a college or university (if applicable), and oftentimes, financial immaturity, are all good reasons for the beneficiary to leave the assets in an UTMA account until he or she attains age 25.