converting minor's account at age 21 - what's your customer-service experience?

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NoHeat
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converting minor's account at age 21 - what's your customer-service experience?

Post by NoHeat » Mon Feb 04, 2019 12:21 am

When my kids turned 21, I handed over three kinds of accounts to them:
- taxable brokerage accounts that are UTMA (Uniform Transfers to Minors Act), at E*trade and TD Ameritrade
- brokerage accounts that are "minor Roth IRA", at E*trade and TD Ameritrade
- 529 account that's UTMA.
I naively expected it to be easy, but I encountered an experience that's harder than opening accounts in the first place.

The worst customer-service experience:
A "minor Roth IRA" at E*trade was a big hassle to hand over. That's because e*trade hasn't bothered to create a dedicated form to fill out for changing the registration for such an account, and their customer service reps can't reliably tell you which other form you must bastardize and how to do it. Lots of foul-ups and miscommunications ensued, for what should have been a routine hand-off.

Somewhat better:
UTMA accounts at TD Ameritrade, and E*Trade's went more smoothly, because the brokerage firms have forms that are almost suitable, although they are intended for a more general purpose, and they're hard for a typical 21-year-old to understand. E*trade is the worst of the two firms.

The best customer-service experience:
Illinois Brightstart 529 UTMA account was fairly easy to hand over, to be owned by my adult child. Maybe that's because 529 funds are focused on the needs of college-age people.

What's your experience?

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celia
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by celia » Mon Feb 04, 2019 12:46 am

I only had UTMA accounts at Vanguard. I don't recall anything unusual. Just another paper transaction to change ownership.

We didn't have any 529 accounts since California doesn't allow tax-free contributions (and because our kids were already in high school when the accounts started). However, I wouldn't have handed over 529 plan accounts if they were/would be eligible for financial aid as FA would expect a lot more of it to be spent if the student was the owner than if the parent was the owner. After the student finished college, I would have then changed the 529 beneficiary to be another child with me still being the account owner

RetiredAL
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by RetiredAL » Mon Feb 04, 2019 1:17 am

My three kids had UTMA's at Schwab. The switching from custodian to them was basically a form that asks the standard name-rank-serialnbr questions like you see on any account application. Since one of them was early, I had to sign that form releasing the account to them. The other two did it themselves slightly after the magical age was reached. No hassles at all.

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NoHeat
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by NoHeat » Mon Feb 04, 2019 9:13 am

celia wrote:
Mon Feb 04, 2019 12:46 am
However, I wouldn't have handed over 529 plan accounts if they were/would be eligible for financial aid as FA would expect a lot more of it to be spent if the student was the owner than if the parent was the owner. After the student finished college, I would have then changed the 529 beneficiary to be another child with me still being the account owner
Perhaps you are confusing two types of accounts, as what you say is appropriate for the more common type of 529 account. I was speaking about 529 UTMA accounts, which are different. They are the result of rolling over funds from a UTMA brokerage account. It is very much inappropriate for the parent to retain ownership of a UTMA account after age 21.

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NoHeat
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by NoHeat » Mon Feb 04, 2019 9:14 am

Delete duplicate post.

Iorek
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by Iorek » Mon Feb 04, 2019 9:19 am

I have a few shares of stock that are held UTMA because a relative bought them as a gift 40 years ago. I have tried on a couple of occasions to convert them but the paperwork they wanted defeated me. Both the dividends and the tax reporting come to me so I don't worry about it. Guess it'll be a good project for retirement.

indexonlyplease
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by indexonlyplease » Mon Feb 04, 2019 9:35 am

We did this last year when our son turned 21. The UTMA at Vanguard was done on the computer "easy".
His Florida pre-paid college fund same thing "easy".

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celia
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by celia » Mon Feb 04, 2019 2:36 pm

Iorek wrote:
Mon Feb 04, 2019 9:19 am
I have a few shares of stock that are held UTMA because a relative bought them as a gift 40 years ago. I have tried on a couple of occasions to convert them but the paperwork they wanted defeated me. Both the dividends and the tax reporting come to me so I don't worry about it. Guess it'll be a good project for retirement.
Be careful when you use the word "convert" since it has a specific meaning in the financial world.

Have you considered transferring the shares (and any dividends in the account) to your taxable account at the same custodian? This assumes the custodian realizes you are now an adult and eligible to pull from the UTMA account.

geekpryde
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by geekpryde » Tue Feb 05, 2019 1:32 pm

This was MANY MANY years ago, but for me it was fairly simple to convert.

I converted my own minor accounts (from when I was 15 years old), when I was around 22 or so. They were not held at VG.

A phone call
waited a week for forms in the mail
brought forms to TD Bank (or whatever it was called back then)
had multiple forms of ID plus an active account at bank
Got a medallion signature guarantee from Bank, took 10 minutes.
Mailed back forms
waited another week or so.
and it was done, my mothers name was removed off my accounts, and they were solely in my name.

I can't remember if I needed my mother to do anything, or sign anything. I honestly dont think I did.

The thing is, I always controlled the accounts myself, had access, and all the info, it was my money. So, they were only with my mothers name on the accounts due to my age only. I don't know if that made my conversion easier or not.

ccieemeritus
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by ccieemeritus » Wed Feb 06, 2019 3:27 am

Simple to convert UTMA at Schwab when DD turned 21. In fact I think they initiated the process automatically.

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munemaker
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by munemaker » Wed Feb 06, 2019 8:29 am

We used the UTMA money for college, but did have experience transferring IRAs to my two kids.

At the time we opened these IRAs, the kids were in early high school. I could only find one house that would accept a custodian IRA for a minor child at the time. I think it was T Rowe Price or maybe Wells Fargo. Anyway, when each of them reached legal age, I gave them the most recent statement and told them to call and have the registration changed to their name (was initially "custodian for ___). They each did that and had no problem.
Last edited by munemaker on Wed Feb 06, 2019 1:01 pm, edited 2 times in total.

Spirit Rider
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by Spirit Rider » Wed Feb 06, 2019 9:20 am

There is a difference between model UGMA accounts and model UTMA accounts. Most states changed to UTMA accounts by 2000. VT only recently changed, and there is only one state (I believe SC) that is still a UGMA state. However, the statute in effect in the state when/where you opened the account remains in effect even if the custodian and/or the account owner move.

The model UGMA legislation allows the account owner to proactively assume ownership at age of termination without any action by the custodian.

The model UTMA legislation requires the custodian to release control. The account owner can NOT assume ownership without the custodian's consent.

Model legislation from the Uniform Law Commission is just that. States have a tendency to makes amendments so they can say it's their state's legislation. I am not aware of any specific states, but an individual state could have adopted the model UTMA legislation while continuing UGMA style age of termination rights.

So you need to know; applicable state at time of account creation, whether a UGMA or UTMA law was in effect, what age of termination was in effect and what are the release of control requirements.

In almost all cases at this point in time. The account owner can NOT themselves can not gain control without the express consent of the custodian or a court order.

retiringwhen
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Re: converting minor's account at age 21 - what's your customer-service experience?

Post by retiringwhen » Wed Feb 06, 2019 9:29 am

I had UTMA accounts at my local credit union and Vanguard.

My experience with the credit union is that the ownership/titling of the accounts was not clean as they ended up as essentially joint accounts between me and my sons. Not desirable for some situations, useful for others (we use the accounts to pay each other for stuff often). I would not want that to happen with long-term assets.

For Vanguard, based on my Flagship Reps advice and counsel, I moved the last money to my last son via the following process.

1.) Have my son create his own account in his own name separate from the UTMA account.
2.) I requested that the assets (2 mutual funds) be transferred in-kind from the UTMA account to his brokerage.

This worked great, I have no relationship with his new account and he got the assets, with original basis and clear ownership.



BTW, it is important long-term to get your name off the account, my father-in-law did not do this for a brokerage account for another of his grand-children (he was still listed as a joint owner) who as 25 years old when my FIL passed away. When he died, the UTMA/Joint account ended up being considered part of his estate, a very unexpected and undesired outcome since a major driver of the UTMA account was originally to gift the money to his grandchildren.

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