UTMA coming due for estranged child

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Topic Author
FelixTheCat
Posts: 2019
Joined: Sat Sep 24, 2011 12:39 am

UTMA coming due for estranged child

Post by FelixTheCat »

I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
Felix is a wonderful, wonderful cat.
User avatar
TomatoTomahto
Posts: 14674
Joined: Mon Apr 11, 2011 1:48 pm

Re: UTMA coming due for estranged child

Post by TomatoTomahto »

I'm sorry to hear about your situation. If the money is sent to the state, presumably the child could recover the funds through one of those state web sites.
I get the FI part but not the RE part of FIRE.
User avatar
galawdawg
Posts: 4702
Joined: Thu Dec 14, 2017 12:59 pm
Location: Georgia

Re: UTMA coming due for estranged child

Post by galawdawg »

FelixTheCat wrote: Wed Nov 23, 2022 2:39 pm I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
Nope, not your problem. Actions have consequences. When your estranged adult child decided not to maintain some form of contact with you, one natural consequence of that decision is that they no longer receive information from you that may be beneficial.

Best wishes...
exodusNH
Posts: 6012
Joined: Wed Jan 06, 2021 8:21 pm

Re: UTMA coming due for estranged child

Post by exodusNH »

FelixTheCat wrote: Wed Nov 23, 2022 2:39 pm I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
No, the money is theirs. If you have contact with someone that talks to them, give that person the info.
User avatar
MP123
Posts: 3030
Joined: Thu Feb 16, 2017 3:32 pm

Re: UTMA coming due for estranged child

Post by MP123 »

FelixTheCat wrote: Wed Nov 23, 2022 2:39 pm I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
Perhaps you as custodian could move the account elsewhere and thus reset the time before it escheats to the state?
Makefile
Posts: 2048
Joined: Fri Apr 22, 2016 11:03 pm

Re: UTMA coming due for estranged child

Post by Makefile »

MP123 wrote: Wed Nov 23, 2022 3:07 pm
FelixTheCat wrote: Wed Nov 23, 2022 2:39 pm I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
Perhaps you as custodian could move the account elsewhere and thus reset the time before it escheats to the state?
Does the custodian arguably even have the authority to do this anymore, now that the minor has reached majority?
I doubt the custodian literally meant that the account would be escheated on the former-minor's 28th birthday. Perhaps the former-custodian using the automated phone system to check the account, or web access, etc., once a year would be enough to avoid it.
User avatar
MP123
Posts: 3030
Joined: Thu Feb 16, 2017 3:32 pm

Re: UTMA coming due for estranged child

Post by MP123 »

Makefile wrote: Wed Nov 23, 2022 3:31 pm
MP123 wrote: Wed Nov 23, 2022 3:07 pm
FelixTheCat wrote: Wed Nov 23, 2022 2:39 pm I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
Perhaps you as custodian could move the account elsewhere and thus reset the time before it escheats to the state?
Does the custodian arguably even have the authority to do this anymore, now that the minor has reached majority?
I doubt the custodian literally meant that the account would be escheated on the former-minor's 28th birthday. Perhaps the former-custodian using the automated phone system to check the account, or web access, etc., once a year would be enough to avoid it.
Yes, I guess it's not clear what age the "child" is at this point, and if the parent is still in control.

But I agree that ping-ing the account somehow (deposit, withdrawl, even just a balance check) should keep it active.
Gill
Posts: 8182
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: UTMA coming due for estranged child

Post by Gill »

Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.

Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
blueskytoo
Posts: 33
Joined: Thu Feb 07, 2019 8:48 pm

Re: UTMA coming due for estranged child

Post by blueskytoo »

I am very sorry to learn of your difficulty with a child/adult. I am going to assume a son, but that is to simplify the terms.

When the trust for my child reached their 21st birthday, my name was removed, and his was made owner, with full control of the account.

if any account remains dormant for a length of time set by the government of your state, the assets are transferred to the state (escheated). In many states, any securities are converted to cash, and when the "now adult minor" claims it, they receive the money, no interest paid.

To prevent escheat from occurring, the account must have "outside" activity, such as a deposit of additional money. The amount may be small, but must be more than a dollar, to be an officially recognized event. This resets the clock for a year in most states, Christmas is a suitable time to do the gift, a birthday is another appropriate reminder. The source of the funds is irrelevant, it is "activity".

Do you have any reason to believe that your son is at the address that you are using to contact him? Contact the post office for the zip code, and verify the name associated with the address. Some people just throw mail for an unknown name in the trash if they have not ever met them.

If not at that address, have someone in the business of tracing deadbeat debtors to find him. If you use the hunter, do not tell how you found him, just say you have searched for a long timer.

Be prepared to find someone that you hardly recognize, be thrilled if you find someone that you are proud of. Worst case, if you find that he has passed away, you can reclaim the account with a certified copy of his death certificate.

Best wishes for a pleasant outcome.
User avatar
CAsage
Posts: 2524
Joined: Sun Mar 27, 2016 6:25 pm

Re: UTMA coming due for estranged child

Post by CAsage »

I'd kiss that off and forget about it. If you have truly been "ghosted" and cut by this estranged child, then make darn sure that the rest of your assets and estate are in apple pie order to go clearly to the people who are in your life, and not a stranger. So many strange posts (here and other places) about strangers trying to hit up estates. Clear estate plans (in some states, you need to name or acknowledge a child in order to disinherit).
Last edited by CAsage on Wed Nov 23, 2022 4:30 pm, edited 1 time in total.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
User avatar
Topic Author
FelixTheCat
Posts: 2019
Joined: Sat Sep 24, 2011 12:39 am

Re: UTMA coming due for estranged child

Post by FelixTheCat »

MP123 wrote: Wed Nov 23, 2022 3:07 pm Perhaps you as custodian could move the account elsewhere and thus reset the time before it escheats to the state?
I found out I cannot move the account to another brokerage this late in the game.
Felix is a wonderful, wonderful cat.
fabdog
Posts: 2163
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: UTMA coming due for estranged child

Post by fabdog »

When our kids reached the age of majority, at least at Schwab, I was informed that no other transactions could take place with the account, other than filling out the forms to move it into their name as owner.

Mike
User avatar
celia
Posts: 15375
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: UTMA coming due for estranged child

Post by celia »

blueskytoo wrote: Wed Nov 23, 2022 4:24 pm . . .Worst case, if you find that he has passed away, you can reclaim the account with a certified copy of his death certificate.
. . .Not if s/he was married or had child(ren) when s/he died.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
livesoft
Posts: 81717
Joined: Thu Mar 01, 2007 8:00 pm

Re: UTMA coming due for estranged child

Post by livesoft »

Just because contact attempts were not acknowledged does not mean the person does not know about the account if the contact attempts mentioned the account.
Wiki This signature message sponsored by sscritic: Learn to fish.
Leesbro63
Posts: 8788
Joined: Mon Nov 08, 2010 4:36 pm

Re: UTMA coming due for estranged child

Post by Leesbro63 »

Since when can UTMA accounts be restricted until age 25? I thought it was “the kid’s” at 21 in every state.
SnowBog
Posts: 3714
Joined: Fri Dec 21, 2018 11:21 pm

Re: UTMA coming due for estranged child

Post by SnowBog »

Leesbro63 wrote: Wed Nov 23, 2022 5:24 pm Since when can UTMA accounts be restricted until age 25? I thought it was “the kid’s” at 21 in every state.
It can differ by state. [first search hit] https://www.policygenius.com/estate-pla ... -by-state/
RetiredAL
Posts: 2505
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: UTMA coming due for estranged child

Post by RetiredAL »

Leesbro63 wrote: Wed Nov 23, 2022 5:24 pm Since when can UTMA accounts be restricted until age 25? I thought it was “the kid’s” at 21 in every state.
CA allows age 25 if when UTMA account is titled as "Name UTMA Age 25".
Leesbro63
Posts: 8788
Joined: Mon Nov 08, 2010 4:36 pm

Re: UTMA coming due for estranged child

Post by Leesbro63 »

RetiredAL wrote: Wed Nov 23, 2022 6:40 pm
Leesbro63 wrote: Wed Nov 23, 2022 5:24 pm Since when can UTMA accounts be restricted until age 25? I thought it was “the kid’s” at 21 in every state.
CA allows age 25 if when UTMA account is titled as "Name UTMA Age 25".
Interesting. I learned something new here. So if living here in Pennsylvania and I wanted to do the age 25 thing, could I open an account in California (or, it appears, Ohio) and title it "Name UTMA Age 25"? And get the age 25 "lock up" for my Pennsylvania domiciled child? Or does the fact that the child is domiciled in Pennsylvania control it so that he or she can get the money at age 21 regardless?
Gill
Posts: 8182
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: UTMA coming due for estranged child

Post by Gill »

FelixTheCat wrote: Wed Nov 23, 2022 4:30 pm
MP123 wrote: Wed Nov 23, 2022 3:07 pm Perhaps you as custodian could move the account elsewhere and thus reset the time before it escheats to the state?
I found out I cannot move the account to another brokerage this late in the game.
But why can’t you sell the assets and request a check like I suggested above?

Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
RetiredAL
Posts: 2505
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: UTMA coming due for estranged child

Post by RetiredAL »

Leesbro63 wrote: Wed Nov 23, 2022 6:55 pm
RetiredAL wrote: Wed Nov 23, 2022 6:40 pm
Leesbro63 wrote: Wed Nov 23, 2022 5:24 pm Since when can UTMA accounts be restricted until age 25? I thought it was “the kid’s” at 21 in every state.
CA allows age 25 if when UTMA account is titled as "Name UTMA Age 25".
Interesting. I learned something new here. So if living here in Pennsylvania and I wanted to do the age 25 thing, could I open an account in California (or, it appears, Ohio) and title it "Name UTMA Age 25"? And get the age 25 "lock up" for my Pennsylvania domiciled child? Or does the fact that the child is domiciled in Pennsylvania control it so that he or she can get the money at age 21 regardless?
IANAL, but my understanding has been that the state of either Custodian or child should be used.

My grand kids are in MT. I'm in CA. I used MT for their UTMA accounts. MT's age is 21. Good enough for me.

Years and years ago, my children had UGMA set up by my parents. Daughter left for college at 18 with her previous UGMA account's checkbook in-hand. She spent it wisely. About that same time, my two son's UGMA accounts were transitioned to a new brokerage and were titled "age 25". At the new brokerage, I was the custodian. Eldest son asked for his account around age 21. I gave to him. He spent it wisely. Youngest son did not assume ownership of his account until age 26, and then only so by threat of escheatment.
User avatar
CAsage
Posts: 2524
Joined: Sun Mar 27, 2016 6:25 pm

Re: UTMA coming due for estranged child

Post by CAsage »

Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
Gill
I would think that if the child is over the age of majority (and OP did not specifically say), that the money is legally the (former) child's property. That is the problem with UTMA accounts, when people (we don't know who) try to lower taxes by putting assets under the child name/SSN. Hence the Kiddie tax. If the child is under 25, then the OP would not have a problem moving the account. It might be possible (again, if minor) to move that account to a 529s account for example, which can be held somewhat in perpetuity for future relatives.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
Weathering
Posts: 544
Joined: Sun Oct 15, 2017 4:20 pm

Re: UTMA coming due for estranged child

Post by Weathering »

Gill wrote: Wed Nov 23, 2022 7:21 pm
FelixTheCat wrote: Wed Nov 23, 2022 4:30 pm
MP123 wrote: Wed Nov 23, 2022 3:07 pm Perhaps you as custodian could move the account elsewhere and thus reset the time before it escheats to the state?
I found out I cannot move the account to another brokerage this late in the game.
But why can’t you sell the assets and request a check like I suggested above?

Gill
This may be the situation the OP is in:
Recently, one of my children reached age 18 (age of majority in my state). Vanguard locked their UTMA account (~6 months after their burthday) and the only action we could take was to have our 18 year old create a Vanguard account and request a transfer from the UTMA account. The only issue for us was taking care of this when our child was on break from college.
Weathering
Posts: 544
Joined: Sun Oct 15, 2017 4:20 pm

Re: UTMA coming due for estranged child

Post by Weathering »

My recommendation is to give the brokerage/bank the most recent contact info for the child/adult and ask them to attempt contact.
User avatar
Lee_WSP
Posts: 8328
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: UTMA coming due for estranged child

Post by Lee_WSP »

You may be able to file a conservatorship for a missing person. Although it’s probably cheaper to pay for a location service. But if you know where they are, just update the brokerage with their information. Not your problem any longer.
placeholder
Posts: 6321
Joined: Tue Aug 06, 2013 12:43 pm

Re: UTMA coming due for estranged child

Post by placeholder »

Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
That sounds like it would be against the law.
User avatar
8foot7
Posts: 3883
Joined: Mon Jan 05, 2015 7:29 pm

Re: UTMA coming due for estranged child

Post by 8foot7 »

placeholder wrote: Fri Nov 25, 2022 2:24 am
Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
That sounds like it would be against the law.
I don’t know if it’s against the law but if the child is of the age of majority, it is certainly improper and I suspect most brokers wouldn’t go along with this type of shenanigan. I am rather surprised at the advice tbh.
Gill
Posts: 8182
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: UTMA coming due for estranged child

Post by Gill »

placeholder wrote: Fri Nov 25, 2022 2:24 am
Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
That sounds like it would be against the law.
Hmm. That’s an interesting thought.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
User avatar
Lee_WSP
Posts: 8328
Joined: Fri Apr 19, 2019 5:15 pm
Location: Arizona

Re: UTMA coming due for estranged child

Post by Lee_WSP »

If the parent is still the trustee of the UTMA, it is allowed. However, the terms of a UTMA doesn't allow a parent to withold the funds from the child. However, the terms of the UTMA likewise does not require the brokerage to escheat the property to a state unclaimed property fund.
Makefile
Posts: 2048
Joined: Fri Apr 22, 2016 11:03 pm

Re: UTMA coming due for estranged child

Post by Makefile »

Gill wrote: Fri Nov 25, 2022 6:56 am
placeholder wrote: Fri Nov 25, 2022 2:24 am
Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
That sounds like it would be against the law.
Hmm. That’s an interesting thought.
Gill
But regardless of whether it's permitted what is the advantage in essentially emulating the escheatment process in order to avoid escheatment?

By the way, I thought it would be mentioned by now, eventually the IRS will send an automated letter to the minor about the unreported 1099-DIV income (assuming there is enough for their computer to bother).
User avatar
MP123
Posts: 3030
Joined: Thu Feb 16, 2017 3:32 pm

Re: UTMA coming due for estranged child

Post by MP123 »

8foot7 wrote: Fri Nov 25, 2022 6:51 am
placeholder wrote: Fri Nov 25, 2022 2:24 am
Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
That sounds like it would be against the law.
I don’t know if it’s against the law but if the child is of the age of majority, it is certainly improper and I suspect most brokers wouldn’t go along with this type of shenanigan. I am rather surprised at the advice tbh.
But if the child is not over 25 and the parent is still the custodian of the account it could be argued that the parent has a fiduciary duty to protect the account for the child. Perhaps that extends to moving the account as described above. But, of course, that might create taxable gains that would have to be dealt with by someone (either child or parent).
User avatar
8foot7
Posts: 3883
Joined: Mon Jan 05, 2015 7:29 pm

Re: UTMA coming due for estranged child

Post by 8foot7 »

MP123 wrote: Fri Nov 25, 2022 1:01 pm
8foot7 wrote: Fri Nov 25, 2022 6:51 am
placeholder wrote: Fri Nov 25, 2022 2:24 am
Gill wrote: Wed Nov 23, 2022 3:46 pm Although it may not be entirely Kosher, I would sell everything in the account, have the broker send you a check for the balance, and then open a bank account in the name of the UTMA. You are then free to deal with that account however you wish.
That sounds like it would be against the law.
I don’t know if it’s against the law but if the child is of the age of majority, it is certainly improper and I suspect most brokers wouldn’t go along with this type of shenanigan. I am rather surprised at the advice tbh.
But if the child is not over 25 and the parent is still the custodian of the account it could be argued that the parent has a fiduciary duty to protect the account for the child. Perhaps that extends to moving the account as described above. But, of course, that might create taxable gains that would have to be dealt with by someone (either child or parent).
It's not immediately clear to me how selling everything and moving the funds to a new account is protecting the account for the child, nor is it immediately clear to me how doing so would bring about results in any way different than the funds escheating to the state.

OP would do well to remember these funds are not his or her property and especially in the case of estrangement, I would not want to do anything that could ever be construed as improper. It is not difficult to claim escheated money from the state. The money is not lost. I would pretend it doesn't exist and move on.
Last edited by 8foot7 on Fri Nov 25, 2022 1:18 pm, edited 1 time in total.
User avatar
LadyGeek
Site Admin
Posts: 86257
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: UTMA coming due for estranged child

Post by LadyGeek »

I want to address several comments related to escheatment / abandoned accounts. For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

Everything is a matter of degree. The choice of using a tax deferred account, e.g. IRA, to avoid taxes during some period of time is one extreme, managing assets to qualify for Medicaid is the other. Gifting assets to avoid taxes is somewhere in the middle. The bottom line is to work within the legal framework. Ethics is the ever present elephant in the room.

The approach is to educate members on how to do things legally. State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
User avatar
Raymond
Posts: 1848
Joined: Mon Apr 16, 2012 6:04 am

Re: UTMA coming due for estranged child

Post by Raymond »

OP, how old is the estranged child?
"Ritter, Tod und Teufel"
User avatar
MP123
Posts: 3030
Joined: Thu Feb 16, 2017 3:32 pm

Re: UTMA coming due for estranged child

Post by MP123 »

8foot7 wrote: Fri Nov 25, 2022 1:13 pm It's not immediately clear to me how selling everything and moving the funds to a new account is protecting the account for the child, nor is it immediately clear to me how doing so would bring about results in any way different than the funds escheating to the state.
It would protect the account from escheating to the state. I certainly agree that the parent could not appropriate the funds for their own use.
User avatar
Watty
Posts: 26128
Joined: Wed Oct 10, 2007 3:55 pm

Re: UTMA coming due for estranged child

Post by Watty »

blueskytoo wrote: Wed Nov 23, 2022 4:24 pm If not at that address, have someone in the business of tracing deadbeat debtors to find him.
These are not just for debtors, people also use people locator services for to find people like old friends and classmates. I assume that you have their Social Security number which would make finding them much easier.

If you are pretty sure that you have a good address for them then you may be able to get the financial instruction to change the name on the address on the account to that address, or to send duplicate correspondence to that address.

If the kid is having addiction problems then one risk is that they might get access to that money and that could cause even more problems. If something like that is going on then it might make sense to let the money escheat to the state and they may be able to recover it some day if the situation improves.
placeholder
Posts: 6321
Joined: Tue Aug 06, 2013 12:43 pm

Re: UTMA coming due for estranged child

Post by placeholder »

Gill wrote: Fri Nov 25, 2022 6:56 am
placeholder wrote: Fri Nov 25, 2022 2:24 am That sounds like it would be against the law.
Hmm. That’s an interesting thought.
Looking at the rules it seems that it would be possible as long as the account was for benefit of the recipient.
ClassII
Posts: 355
Joined: Fri May 21, 2021 12:05 pm

Re: UTMA coming due for estranged child

Post by ClassII »

Even if addiction is suspected I'm not sure I'd want to risk a lawsuit from my own kid by withholding info about the account. They're estranged for a reason, getting sued would not at all be out of the realm of possibility. If not by them then by someone controlling them.

This situation sounds like not much can be done with the account since the child is well over the age of majority. Perhaps if they were under 18 (or whatever) you could donate the money to charity in their name. At least then it wouldn't go to the state or to feed an addiction. If they're a minor I can't imagine anyone could argue it in court.

tl;dr - Spend a minimal amount on a person finding service and mail them an account statement and letter explaining what it is in the least words possible. If they can't find your child then at least you made an honest effort. Play this extremely defensively as the only person who you need to worry about in this scenario is you and those still in your life.
User avatar
8foot7
Posts: 3883
Joined: Mon Jan 05, 2015 7:29 pm

Re: UTMA coming due for estranged child

Post by 8foot7 »

ClassII wrote: Sun Nov 27, 2022 3:34 am Perhaps if they were under 18 (or whatever) you could donate the money to charity in their name. At least then it wouldn't go to the state or to feed an addiction. If they're a minor I can't imagine anyone could argue it in court.

A custodian donating a minor’s property is not an action taken for the benefit of the minor. It’s not the custodian’s place to give away money that doesn’t belong to the custodian.
ClassII
Posts: 355
Joined: Fri May 21, 2021 12:05 pm

Re: UTMA coming due for estranged child

Post by ClassII »

8foot7 wrote: Sun Nov 27, 2022 7:26 am
ClassII wrote: Sun Nov 27, 2022 3:34 am Perhaps if they were under 18 (or whatever) you could donate the money to charity in their name. At least then it wouldn't go to the state or to feed an addiction. If they're a minor I can't imagine anyone could argue it in court.

A custodian donating a minor’s property is not an action taken for the benefit of the minor. It’s not the custodian’s place to give away money that doesn’t belong to the custodian.
Yeah I suspected as much. So maybe in the end letting it go to the state is the (morally) best option if the alternative is feeding an addiction. But still my overall point is the parent really does need to at least have documented proof they tried to give the money over. If it ever comes back to the child that the money was never given over it could lead to trouble later.
MikeG62
Posts: 4758
Joined: Tue Nov 15, 2016 3:20 pm
Location: New Jersey

Re: UTMA coming due for estranged child

Post by MikeG62 »

livesoft wrote: Wed Nov 23, 2022 5:14 pm Just because contact attempts were not acknowledged does not mean the person does not know about the account if the contact attempts mentioned the account.
OP, have your attempts to contact your now adult child included a mention that this account exists?

Do you know anyone who knows your child who could be an intermediary?

Do you have any interest in seeing your child with these funds?

Lots of open questions here.
Real Knowledge Comes Only From Experience
User avatar
arcticpineapplecorp.
Posts: 11511
Joined: Tue Mar 06, 2012 9:22 pm

Re: UTMA coming due for estranged child

Post by arcticpineapplecorp. »

if you really want to get these funds to your estranged child would you be willing to hire a private detective to locate your estranged child for the purposes of simply informing him/her of this account they might or might not know about? (I understand it's an additional cost to you to hire a private detective, but if you want the fund to go to your child, this might be the best course of action to achieve that goal.) Let us know how it goes.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
ncbill
Posts: 1581
Joined: Sun Jul 06, 2008 4:03 pm
Location: Western NC

Re: UTMA coming due for estranged child

Post by ncbill »

ClassII wrote: Sun Nov 27, 2022 3:34 am Even if addiction is suspected I'm not sure I'd want to risk a lawsuit from my own kid by withholding info about the account. They're estranged for a reason, getting sued would not at all be out of the realm of possibility. If not by them then by someone controlling them.

This situation sounds like not much can be done with the account since the child is well over the age of majority. Perhaps if they were under 18 (or whatever) you could donate the money to charity in their name. At least then it wouldn't go to the state or to feed an addiction. If they're a minor I can't imagine anyone could argue it in court.

tl;dr - Spend a minimal amount on a person finding service and mail them an account statement and letter explaining what it is in the least words possible. If they can't find your child then at least you made an honest effort. Play this extremely defensively as the only person who you need to worry about in this scenario is you and those still in your life.
Move to a spendthrift trust since that is for the benefit of a minor with an addiction problem.

You'd know (not suspect) if they had one.
CletusCaddy
Posts: 1270
Joined: Sun Sep 12, 2021 4:23 am

Re: UTMA coming due for estranged child

Post by CletusCaddy »

galawdawg wrote: Wed Nov 23, 2022 2:51 pm
FelixTheCat wrote: Wed Nov 23, 2022 2:39 pm I set up a UTMA for my child a long time ago with the age of majority being 25. My kid is estranged and all attempts at contact have been not returned. The brokerage firm told me the account will be closed in three years and the money will be sent to the state.

Are there any alternatives to this situation?
Nope, not your problem. Actions have consequences. When your estranged adult child decided not to maintain some form of contact with you, one natural consequence of that decision is that they no longer receive information from you that may be beneficial.

Best wishes...
I can imagine certain scenarios of estrangement where the last thing the child wants is to benefit from their parents' money.

I can also imagine scenarios where a parent intentionally creates a UTMA in order to reconnect with an unwilling child.

All of which is to say, it's not at all clear that it's in the child's best interest to accept this money.
User avatar
Beensabu
Posts: 3068
Joined: Sun Aug 14, 2016 3:22 pm

Re: UTMA coming due for estranged child

Post by Beensabu »

I am very sorry.

If your child is not accepting communications from you, and even ignoring communications saying "this is your money, no strings attached, please claim it so it is not lost forever", then that is it. There is nothing you can do. Perhaps they might claim it later in desperation years (always an option). Or not. In which case, they do not want your money, and you do not get it back either.

I am very sorry. I am sure you love them very much, and I hope whatever misunderstanding took place is rectified while still possible.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
User avatar
8foot7
Posts: 3883
Joined: Mon Jan 05, 2015 7:29 pm

Re: UTMA coming due for estranged child

Post by 8foot7 »

There seems to be a vital misunderstanding of escheatment. The monies go to the state to be held in unclaimed property trust. They are not lost forever. They can be claimed at any time by their rightful owner. It is not “lost forever.” Given the limited information we have, this is not at all a bad result and perhaps even a preferable one if there is a concern over the mental state of the account owner.
toddthebod
Posts: 607
Joined: Wed May 18, 2022 12:42 pm

Re: UTMA coming due for estranged child

Post by toddthebod »

If you really want to keep the money in an account (for example, to keep it invested), you can set up a custodial 529 and transfer the money there. You can't subsequently change the beneficiary like you can with a typical 529, but the money can remain invested until the estranged chlld comes for it.
Backtests without cash flows are meaningless. Returns without dividends are lies.
Makefile
Posts: 2048
Joined: Fri Apr 22, 2016 11:03 pm

Re: UTMA coming due for estranged child

Post by Makefile »

toddthebod wrote: Sun Nov 27, 2022 8:35 pm If you really want to keep the money in an account (for example, to keep it invested), you can set up a custodial 529 and transfer the money there. You can't subsequently change the beneficiary like you can with a typical 529, but the money can remain invested until the estranged chlld comes for it.
But this would generate a 1099-B for the sale of the assets under the SSN of the minor in order to raise the cash for the 529, that the minor has no way of knowing about (since there is communication breakdown) and properly reporting.
toddthebod
Posts: 607
Joined: Wed May 18, 2022 12:42 pm

Re: UTMA coming due for estranged child

Post by toddthebod »

Makefile wrote: Sun Nov 27, 2022 8:37 pm
toddthebod wrote: Sun Nov 27, 2022 8:35 pm If you really want to keep the money in an account (for example, to keep it invested), you can set up a custodial 529 and transfer the money there. You can't subsequently change the beneficiary like you can with a typical 529, but the money can remain invested until the estranged chlld comes for it.
But this would generate a 1099-B for the sale of the assets under the SSN of the minor in order to raise the cash for the 529, that the minor has no way of knowing about (since there is communication breakdown) and properly reporting.
Could Dad write a check to the IRS for 15% of the capital gains with the kid's SSN?
Backtests without cash flows are meaningless. Returns without dividends are lies.
Makefile
Posts: 2048
Joined: Fri Apr 22, 2016 11:03 pm

Re: UTMA coming due for estranged child

Post by Makefile »

toddthebod wrote: Sun Nov 27, 2022 9:20 pm
Makefile wrote: Sun Nov 27, 2022 8:37 pm
toddthebod wrote: Sun Nov 27, 2022 8:35 pm If you really want to keep the money in an account (for example, to keep it invested), you can set up a custodial 529 and transfer the money there. You can't subsequently change the beneficiary like you can with a typical 529, but the money can remain invested until the estranged chlld comes for it.
But this would generate a 1099-B for the sale of the assets under the SSN of the minor in order to raise the cash for the 529, that the minor has no way of knowing about (since there is communication breakdown) and properly reporting.
Could Dad write a check to the IRS for 15% of the capital gains with the kid's SSN?
If the parent makes an estimated tax payment on behalf of the child, I see no reason why it wouldn't be processed by the IRS, but this is only creates additional discrepancy between what information the child has and believes when filing their return versus what reality is.

edit: You might also ask, why not send the entire proceeds of the account to the IRS as an estimated tax payment rather than just the capital gains amount or involving a 529 at all. That's one way to get them (eventually) to the child :D
Last edited by Makefile on Sun Nov 27, 2022 9:44 pm, edited 1 time in total.
User avatar
8foot7
Posts: 3883
Joined: Mon Jan 05, 2015 7:29 pm

Re: UTMA coming due for estranged child

Post by 8foot7 »

toddthebod wrote: Sun Nov 27, 2022 8:35 pm If you really want to keep the money in an account (for example, to keep it invested), you can set up a custodial 529 and transfer the money there. You can't subsequently change the beneficiary like you can with a typical 529, but the money can remain invested until the estranged chlld comes for it.
This would also not be for the benefit of the minor, as the 529 withdrawals that aren’t for qualified expenses would be subject to a penalty. The custodian would be removing the ability for the account owner to use the funds freely.
Post Reply