Topic: Uniform Transfers to Minors Act (UTMA)
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Do we still need to check our list of deceased customers for unclaimed property? Do we still need to check for UTMA accounts for which the beneficiaries have reached the age of 21, plus the 3-year abandonment period, to ensure that the custodians were removed?
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Yes, we believe that both processes described in your question continue to be necessary under the Illinois Revised Uniform Unclaimed Property Act (Illinois RUUPA). When a customer dies, their accounts generally will be presumed abandoned two years after their last indication of interest in the accounts (unless the applicable abandonment period is shorter than two…
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Can a payable on death (POD) beneficiary be named on an UTMA account?
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No, the Illinois Uniform Transfers to Minors Act (UTMA) does not allow for the naming of a POD beneficiary. Rather, the UTMA directs the custodian of the UTMA account to transfer the custodial property to the minor’s estate upon the minor’s death. For resources related to our guidance, please see: Illinois UTMA, 760 ILCS 20/21(a) (“The custodian…
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Do we have to treat accounts established under a court order as inactive when the court order prohibits withdrawals until the beneficiary reaches the age of majority? It seems counterproductive to send out inactive notices for these accounts when no activity can be conducted.
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No, we do not believe that your bank should treat these accounts as inactive. They will not be considered unclaimed property until three years after the account beneficiaries reach the age of majority, assuming the court orders establishing the accounts were entered pursuant to authority under either the Illinois Probate Act of 1975 or the…
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For our UTMA accounts, we always disclosed that the accounts would convert to ordinary savings accounts when the beneficiary reaches the age of majority, with “applicable charges” applying after the conversion. However, our original account disclosures for the UTMA accounts do not specify what charges will apply after the conversion to a savings account. Should we send new disclosures to the UTMA account beneficiaries after converting their accounts to savings accounts?
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Yes, we recommend treating the conversion to a savings account as a new account opening, requiring new disclosures and a new account agreement. Regulation DD requires savings account disclosures to include “the amount of any fee that may be imposed . . . and the conditions under which the fee may be imposed.” Simply stating…
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We have guardianship accounts held as certificates of deposit (CDs) that were established under court orders prohibiting any withdrawals until the beneficiary reaches the age of majority. We have no other accounts for or contact with the guardians and minor beneficiaries for these accounts. Under the new Illinois unclaimed property law, do we have to report and remit these CDs to the state if there is no contact within three years, even if the minor has not yet reached the age of majority?
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No, the three-year abandonment period will not begin to run until the account beneficiaries reach the age of majority — assuming that the accounts were established as minor guardianship accounts under the Illinois Probate Act of 1975, or as custodial accounts under the Uniform Transfers to Minors Act (UTMA). The new Illinois Revised Uniform Unclaimed…
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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?
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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…
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Under the new Illinois Revised Unclaimed Property Act (Illinois RUUPA), am I correct that the start date for the presumed abandonment period for UTMA accounts is different than regular deposit accounts?
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Yes, the Illinois RUUPA establishes different presumed abandonment periods for deposit accounts and Uniform Transfers to Minors Act (UTMA) accounts. For both deposit accounts generally and UTMA accounts, the presumed abandonment period is three years, but those periods begin to run on different dates. For deposit accounts, the start date for the presumed abandonment period…
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If our bank is the custodian for a Uniform Transfers to Minors Act (UTMA) account, is it our responsibility to contact the beneficiary when coming of age? Also, if the beneficiary is unaware of the account, can we disclose the source of the funds (such as a grandparent)?
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Yes, we recommend notifying the beneficiaries of UTMA accounts when they reach the age of majority. As the custodian for a UTMA account, your bank is responsible for transferring property to the beneficiaries after they reach the applicable age of majority. The UTMA requires custodians to “transfer in an appropriate manner the custodial property .…
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Our accounts established under the Uniform Transfers to Minors Act (UTMA) are titled incorrectly. How should we correct the titling errors?
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Illinois law requires UTMA accounts held by a financial institution to be designated in the name of the person establishing the account, followed by the words “as a custodian for ………….. (name of minor) under the Illinois Uniform Transfers to Minors Act.” Since the accounts in question are not correctly titled, we believe you should…
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Under Illinois law, how should we title an account established under the Uniform Transfers to Minors Act (UTMA)?
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Accounts established under the Illinois UTMA 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.” For resources related to our guidance, please see: Illinois Uniform Transfers to Minors Act, 760 ILCS 20/10(a)(2) (“Custodial…