CUTMA - FAQS
What is a CUTMA account?
A CUTMA (California Uniform Transfers to Minors Act) account lists the minor as the account owner, which allows a Custodian to transfer gifts, property, or other assets to that minor through the CUTMA account.
Who is the owner of the account?
The minor is the owner of the account. The funds in the CUTMA account belong to the minor, but are managed by a designated Custodian. The Custodian holds the account solely for the benefit of the minor and only the Custodian has access to the funds in the account.
The funds in the account are to be used only for the benefit of the minor.
How many owners can be named on the account?
There can only be one minor named as the owner of each CUTMA account.
How many custodians can be named on the account?
There can only be one Custodian named on the CUTMA account; however, a successor Custodian can be named. The Custodian can be any responsible adult.
Are there any restrictions on how the funds in the account are used?
There are no restrictions on how the funds in the account are used by the Custodian, as long as the use is for the benefit of the minor. The funds in the account may be withdrawn, but only by the Custodian. The minor does not have access to the funds. A CUTMA account is not eligible for ATM or VISA® Check Card Access, nor for online banking services.
How is income earned reported?
The interest earned is taxable income, and is reported under the minor's tax identification number.
How and when are the funds given to the minor?
In general, the custodianship ends when the minor turns 18 years of age. However, this may be delayed until the time the minor attains a designated age, if specified in the account title.
In order to terminate the custodianship when the minor reaches the designated age, the Custodian must close the account and transfer the funds to the minor.
How is a CUTMA account different from a Joint Account with a Minor?1
A Joint Tenancy account is the property of each account owner. Each owner will have an equal ownership interest in the account, and each may withdraw the funds within the account. Income earned will be reported under the tax identification number of the Primary Account owner.
A CUTMA account restricts access of the funds to only the Custodian named on the account. The funds withdrawn are to be used for the benefit of the minor. The minor will not have direct access to the funds until they reach a designated age. Income earned will be reported under the tax identification number of the minor.
1 Please consult your legal or tax advisor before deciding which form of ownership is best for you.
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