If a custodian for an UTMA account also has an individual checking account at our bank, and both accounts share the same mailing address, can the custodian’s activities on the individual checking account be treated as indications of interest in the UTMA account?

Yes, we believe that the custodian’s activities on the individual checking account could be treated as indications of interest in a Uniform Transfers to Minors Act (UTMA) account.

The Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA) provides that an inactive deposit account is considered active if “any other accounts” at the same financial institution have qualifying activities “directed by an apparent owner,” such as increasing or decreasing the account funds or making a loan payment. The Illinois RUUPA defines “apparent owner” as a person appearing on your books and records as the owner of an account, and it defines “owner” as any “person that has a legal, beneficial, or equitable interest in property.”

We believe that the UTMA account custodian is an “apparent owner” of the UTMA account, with a legal interest in the account property as custodian. This would be similar to the ownership interest of a trustee, which is not the beneficiary of a trust account but has a legal interest in the account. Because the custodian also is the owner of an individual checking account, and both accounts share the same mailing address in your institution’s records, both accounts may be treated as active if the custodian engaged in qualifying activities on the individual checking account (such as increasing or decreasing the account balance).

However, note that a custodian’s interest in an UTMA account terminates when the minor reaches the age of majority — which could be age 18 or 21, depending on the type of UTMA account. We do not recommend treating activities by the former custodian of an UTMA account as indications of interest in an UTMA account after the minor reaches the age of majority.

Additionally, note that the three-year presumed abandonment period for UTMA accounts will not begin to run until after the minor reaches the age of majority. The three-year abandonment period begins to run on the later of a first or second returned mailing or the date on which the minor reaches the age of majority.

For resources related to our guidance, please see:

Illinois RUUPA, 765 ILCS 1026/15-210(f) (“If the apparent owner has another property with the holder to which Section 201(6) applies, then activity directed by an apparent owner in any other accounts, including loan accounts, at a financial organization holding an inactive account of the apparent owner shall be an indication of interest in all such accounts if:

(A) the apparent owner engages in one or more of the following activities:

(i) the apparent owner undertakes one or more of the actions described in subsection (b) of this Section regarding any account that appears on a consolidated statement with the inactive account;

(ii) the apparent owner increases or decreases the amount of funds in any other account the apparent owner has with the financial organization; or

(iii) the apparent owner engages in any other relationship with the financial organization, including payment of any amounts due on a loan; and

(B) the foregoing apply so long as the mailing address for the apparent owner in the financial organization’s books and records is the same for both the inactive account and the active account.”)

Illinois RUUPA, 765 ILCS 1026/15-102(3) (“‘Apparent owner’ means a person whose name appears on the records of a holder as the owner of property held, issued, or owing by the holder.”)

Illinois RUUPA, 765 ILCS 1026/15-102(21) (“‘Owner’, unless the context otherwise requires, means a person that has a legal, beneficial, or equitable interest in property subject to this Act or the person’s legal representative when acting on behalf of the owner. . . .”)

Uniform Law Commission, Revised Uniform Unclaimed Property Act, Section 201, Official Comment (printed page 24) (“‘Owner’ – Legal and beneficial ownership interest are recognized in this definition in Section 102(21). . . . For example, the legal owner of trust assets is the trustee. In situations where there is no trustee to act, the beneficiary or equitable owner is the ‘owner’ for purposes of this act. The trustee, as legal owner, has precedence over the beneficial owner unless the beneficiary establishes that the trust has terminated or there is no trustee to take and hold the property. Similarly, for bank accounts, brokerage accounts, IRAs, and other similar property, the legal owner of the account would take precedence over a named beneficiary who does not yet have legal ownership of the account.”)

Illinois Uniform Transfers to Minors Act, 760 ILCS 20/21(b) (An UTMA custodian is required to transfer property to the minor “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 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 date 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 a communication 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 . . . .”)