23 May Can we help our son protect money in an account in his name?

Q. My ex-wife and I decided to put some of the proceeds of the sale of our house — $100,000 — into a UTMA for our son with her as the custodian. He is 19 years old. We’ve expressed with him concerns about a relationship he is in and we want to protect the money from other interested parties. He is not married and I assume once he was married, he could do a pre-nup, but we don’t think he’d do that. He did agree that if we have concerns, he’s willing to sign up for a dissolution or other change to the UTMA such that our custodial permissions are extended for his protection. That said, I am not sure dissolution is a thing based on my cursory look online at New Jersey law. What are the options? I am trying to draft something for his and our signature that we can have notarized which either changes the UTMA to add protection or dissolves it, if that is even a thing.
— Planning

A. This is a complicated situation.

It’s understandable that you want to help your son to protect this money.

It’s also good that he’s on board to do something towards that goal.

“Our practice in situations like this is for the beneficiary of the UTMA account to transfer the assets to a trust that he would establish, with one or both parents as trustee,” Steven Holt, partner and chair of the tax law, trusts and estates practices with Mandelbaum Barrett PC in Roseland.

“This strategy does not protect against his creditor claims, since your son is the sole beneficiary, but it does vest management and distribution control in you as the trustee.”

On the pre-nup side of things, that will require some planning.

In New Jersey, a prenuptial agreement has to be done before the marriage and you can’t force him to do one, said David Carton, partner and co-chair of the matrimonial and family law practice group at Mandelbaum Barrett PC.

“Of course, a correctly prepared prenuptial agreement can and should protect these sums,” Carton said. “I do have concerns about him signing an agreement after he is married as very often they are not enforceable.”

Good luck in your planning.

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This story was originally published in May 2024.

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