14 Dec What happens to a custodial account when a minor child dies?

Q. What happens to an UTMA when the minor dies before reaching majority?
— Unsure

A. UTMA refers to the Uniform Transfers to Minors Act, which allows a minor to receive gifts without a guardian or trustee.

The account has tax advantages while the child is still a minor.

For the state of New Jersey, the age of majority is 18, said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield.

He said the donor can name a custodian who has the fiduciary responsibility to manage the account on behalf of the minor until they become of legal age. In many cases the donor is the custodian, he said.

“If the minor dies before maturity, the money becomes part of the minor’s estate,” Gobo said. “If the minor does not have a will, the parents would most likely inherit the estate.”

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This story was originally published on Dec. 14, 2021.

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