IBA Compliance Connection

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For purposes of the Illinois Uniform Transfers to Minors Act (UTMA), when does a custodianship terminate?

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The age at which an UTMA custodianship created under the Uniform Transfers to Minors Act terminates depends on how the custodianship was created. 760 ILCS 20/21. In general, an UTMA deposit account created by gifting money to a minor will terminate at age 21. However, there are some circumstances in which other types of UTMA custodianships will terminate at age 18. The details of the rules that determine when a custodianship will terminate are below:

UTMA custodianships created under Section 5 or Section 6 of the Act terminate when a minor turns 21.

  • An UTMA custodianship created under Section 5 of the Act terminates when the minor turns 21. These custodianships are created by gifting property to a minor or by exercising a power of appointment to transfer property to a minor.
  • An UTMA custodianship created under Section 6 of the Act terminates when the minor turns 21. These custodianships are created by a fiduciary acting under a will, trust, or other governing instrument that permits or requires the fiduciary to transfer property to the minor.

However, UTMA custodianships created under Section 7 or Section 8 of the Act instead terminate when the minor turns 18 (the age of majority in Illinois). Both of these types of custodianships terminate early because they are substitutes for conservatorships, which would have terminated at age 18 under Illinois law.

  • An UTMA custodianship created under Section 7 of the Act terminates when the minor turns 18. These custodianships are created by a fiduciary acting under a will, trust, or other governing instrument that expressly prohibits the use of an UTMA custodianship or that is inconsistent with an UTMA custodianship.
  • An UTMA custodianship created under Section 8 of the Act terminates when the minor turns 18. These custodianships are created by a person who holds a minor’s property (such as a bank transferring funds in a payable-on-death (POD) deposit account to a minor) or who owes a debt to a minor (such as a party against whom a minor has a court claim or judgment).