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Personal Finance > Ask the Expert
UTMA accounts
July 27, 2000


By Jean Sherman Chatzky
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I am opening an UTMA account for my daughter in Vanguard's Morgan Growth fund. Vanguard representatives told me that I can not list a secondary custodian or a beneficiary. But what happens if my daughter dies? As custodian, would the money become mine?
- Grant Dahlke, East Dundee, Illinois

John McCabe, legal counsel at the National Conference of Commissioners on Uniform State Laws, says Vanguard is right--you cannot name a beneficiary to a UTMA account. UTMAs (so named because they were created by the Uniform Transfer to Minors Act) are not trusts. Rather, when you put money in a UTMA, you are making an irrevocable transfer of assets, and that money belongs to the minor. As custodian, you merely act as a guardian until the minor reaches the age of maturity (usually 18 or 21, depending on each state's laws). If the minor dies before maturity, UTMA money becomes part of the minor's estate. If the minor does not have a will, the parents would most likely inherit the estate.

However, says McCabe, you should be able to appoint a custodian to take over should something happen to you. If you're looking for more information, read Section 18 of the Uniform Transfer to Minors Act ("Renunciation, resignation, death, or removal of custodian; designation of successor custodian.") You can find the entire Act, comments on each section, and information on the adoption and explanation of all uniform laws at the website of the National Conference of Commissioners on Uniform State Laws.






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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.