An Illinois UTMA account is a custodial account that allows funds to be set aside for a minor while restricting the minor’s use of the funds. Conversely, a minor account functions like an ordinary account opened for an adult, since the Illinois Banking Act provides that such accounts are binding on the minor as if they were an adult.

Unlike ordinary accounts, UTMA accounts must be designated in the name of the minor’s account custodian followed by the words “as a custodian for ………. (name of minor) under the Illinois Uniform Transfers to Minors Act,” and this language must be used for custodial property to be transferred into an UTMA account. Such transfers are irrevocable, as “the custodial property is indefeasibly vested in the minor.”   

UTMA accounts also terminate when the minor turns 18, unless the settlor specifies that the custodianship continue to age 21. UTMA accounts also may be for the benefit of only one child, and only one person can be designated as custodian, whereas a minor account can have one or more authorized signers, as discussed in our previous Q&A.

Additionally, UTMA accounts are subject to specialized rules for purposes of determining when property has been abandoned. Under the Illinois Revised Uniform Unclaimed Property Act, the presumed abandonment period for UTMA accounts begins to run when the minor reaches the age of majority — which would be age 18 or 21, depending on the type of UTMA account.

For resources related to our guidance, please see:

• Illinois Banking Act, 205 ILCS 5/45.1 (“A state bank may accept deposits made by a minor and may open an account in the name of such minor and the rules and regulations of such bank with respect to each such deposit and account shall be as binding upon such minor as if such minor were of full age and legal capacity.”)

• Illinois Uniform Transfers to Minors Act, 760 ILCS 20/10(a)(2) (“Custodial property is created and a transfer is made whenever . . . . (2) money is paid or delivered to a broker or financial institution for credit to an account in the name of the transferor, an adult other than the transferor, or a trust company followed in substance by the words: ‘as custodian for ………. (name of minor) under the Illinois Uniform Transfers to Minors Act’ . . .”)

• Illinois Uniform Transfers to Minors Act, 760 ILCS 20/12(b) (“A transfer made pursuant to Section 10 is irrevocable, and the custodial property is indefeasibly vested in the minor, but the custodian has all the rights, powers, duties, and authority provided in this Act, and neither the minor nor the minor’s representative has any right, power, duty, or authority with respect to the custodial property except as provided in this Act.”)

• IICLE, Elements of Illinois Law: Estate Planning and Probate Administration 2020 Edition, Chapter 1 — Estate Planning (“Transfers can also be made for the benefit of minor children by creating a custodianship under the Illinois Uniform Transfers to Minors Act (UTMA), 760 ILCS 20/1, et seq. Like the §2503(c) trust, a transfer into an UTMA custodial account is irrevocable, but the UTMA account terminates at age 18 unless the settlor specifies that the custodianship continue to age 19, 20, or 21. See 760 ILCS 20/12(b), 20/21.”)

• Illinois Uniform Transfers to Minors Act, 760 ILCS 20/21(a) (“The custodian shall transfer in an appropriate manner the custodial property (to the extent that it has not been used pursuant to this Act) to the minor or to the minor's estate upon the earlier of: (1) the minor's attainment of 21 years of age with respect to custodial property transferred under Section 5 or 6; (2) the minor's attainment of majority under the laws of this State other than this Act with respect to custodial property transferred under Section 7 or 8; or (3) the minor's death.”)

• Illinois Uniform Transfers to Minors Act, 760 ILCS 20/11 (“Single Custodianship. A transfer may be made only for one minor, and only one person may be the custodian. All custodial property held under this Act by the same custodian for the benefit of the same minor constitutes a single custodianship.”)

• Illinois RUUPA, 765 ILCS 1026/15-204(a) (Property held in an UTMA account “is presumed abandoned if it is unclaimed by or on behalf of the minor on whose behalf the account was opened 3 years after the later of:

(1) except as in subparagraph (2), the a communication sent by the holder by first-class United States mail to the custodian of the minor is returned undelivered to the holder by the United States Postal Service;

(2) if is re-sent within 30 days after the date the first communication is returned undelivered, the date the second communication was returned undelivered; or

(3) the date on which the custodian is required to transfer the property to the minor or the minor’s estate.”)