I recently found out that I have a UTMA account with Fidelity that was set up by my grandmother who is also the named custodian of the account. Her and I are not on speaking terms and haven't been for many years. She called me wanting to sign over the account to her since she helped my husband and I purchase a car 8 years ago and this money should be repaid with the funds from the UTMA. From what I know NO funds have ever been withdrawn from this account she has always used her personal money to gift me things. I don't have a problem repaying her the money for the "car loan" as shes calling it but she wants all the money. My question is can she fight me on this in court since the "car loan" was given years after I had already hit majority (27) or can she still go after me when the money should have been mine at 21? I guess Fidelity has been sending out letters to custodians because they are noticing they have a ton of accounts that are in this same boat but without the family drama. I am in AZ. Any tips/advice is greatly appreciated. Thanks!
Answers & Comments
If you had an UTMA account the financial institution is required to inform you as soon as you reach the age of majority. If you HAD a husband 8 year ago, there is NO WAY the financial institution allowed your grandmother to remain custodian this long. If they were unable to locate you, the account would have been turned over the the state as unclaimed funds by now.
I don't know what the facts are, but I know YOU are misinformed.
Apparently you do have proof of the account. Do you know how much money is in it?
By law, the UTMA was an irrevocable gift to you at the time it was funded. Any income it made in the meantime was income to you (and taxable to you). It's rare to demand an accounting of the disbursements.
During the life of the UTMA, the funds could be used for your benefit, including buying a vehicle if the custodian agreed. (Why she didn't take the funds then is a question for the ages.) She was, theoretically, allowed to give you money and then reimburse herself later. Later is usually within a month or two, but apparently she thinks 8 years is okay since she never did.
As you have discovered, the date for when an UTMA should be transferred to you can come and go without you getting the money. This is incredibly common. I have never heard of a financial institution handing the money over without a sign off letter or a court order.
According to you, all of the money in question is money she came up with, whether it was in the UTMA or from her checking account at the time of the car purchase. She now wants to make the amount of her gifts to you less. She can think of the UTMA money as hers all she wants, but it isn't. She can call the car money a loan all she wants, but without paperwork--signed by you and/or your husband--it was a gift. (Loan paperwork would also have had an interest rate and a repayment schedule.)
If there is no paperwork showing there was a car loan, I would dig out the paperwork from when you bought the car and figure out exactly how much grandma paid. Then I would tell grandma that you will "reimburse" her from the UTMA up to that much only. No interest because it was her fault she forgot to do it at the time. If the car cost more, tough.
Note, if the UTMA assets are in stock, you need to calculate how much you will owe in tax (usually this is long term), before handing grandma all the money.
Note#2, I would use IRS form 4506-T to request 10 years of income statements to make sure there aren't any other surprises. Eg, a stock sale you didn't report because you never saw the 1099-B....
She is no longer custodian as yo are not a minor. Call Fidelity and handle it, get her name off.
Talk first to an attorney and then you can decide if you want to repay what she's spent on you. You can talk to Fidelity also but I suspect they will waffle on legal issues.
You don't have to transfer all the money to her even if you do decide to pay something to her. The whole purpose of a UTMA is to transfer funds to you.
< My question is can she fight me on this in court since the "car loan" was given years after I had already hit majority >
If she wants to spend the money on attorneys, sure, doesn't mean she will win. Spend a couple hundred dollars on an attorney who is experienced in this area and find out where you legally stand. Then you can make an informed decision.
I also found this:
https://www.sapling.com/8413332/can-withdraw-utma-...
Any money placed into a UTMA account is the legal property of the beneficiary child. As a minor, a child cannot access the money in the account directly. Rather, the custodian is charged with the responsibility of taking appropriate distributions, which must be for the benefit of the child. The law offers a lot of latitude regarding what is "for the benefit of the child." As long as you can document that what you have spent the money on benefits the child, you shouldn't run into any problems. Music lessons, braces, a computer for school or even a car are allowable withdrawals from a UTMA.
So at the time, using some of the money to pay for a vehicle for you would likely have been fine. This far after the fact, I doubt she has a claim for that money retroactively.
She can't take money out of that account and keep it for herself.
The funds were supposed to have been distributed to you by now. Contact Fidelity and get it done.
"My question is can she fight me on this in court" Fight you on what? That you owe her money for an unpaid loan? Sure. That she is entitled to revoke the entire UTMA account? No.