This week we had a client come to our office to transfer real estate to her minor grandchild. So we talked about the multiple options and the danger of a guardianship process. However, we talked about an option that fit her needs, setting up a trust under the Florida’s Uniform Transfers to Minors Act (FUTMA) which offers the possibility of appointing someone to manage and administer the asset on behalf of the minor until the minor reaches the age of majority. This could involve appointing a custodian to oversee the assets and use them for the minor’s benefit. Keep on reading this article as we explain the Florida Uniform Transfers to Minors Act.
How Does the FUTMA Work?
In Florida, a UTMA account serves as a custodial arrangement established by a parent on behalf of their child, presenting the prevalent means of passing assets to minors in the state. governed by the Florida Uniform Transfers to Minors Act (FUTMA), this framework delineates the procedure for initiating such custodial accounts. Essentially, by titling the account as “custodian for (minor’s name) under the Florida Uniform Transfers to Minors Act,” an adult effectively establishes a custodial account for the minor.
Let’s be clear, the assets on the FUTMA legally belong to the minor child, but the custodian can manage, invest, and distribute it as the minor’s fiduciary until the minor reaches legal age and the account terminates, so he or she receives the properties. The definition of “legal age” differs depending on the method of property transfer. In cases where the transfer was a gift or executed through a Florida last will or trust specifically establishing a UTMA account, the account concludes upon the minor reaching 21 years of age. Conversely, if the transfer stems from a will or trust without explicitly establishing a UTMA account, or from the estate of a decedent lacking a will, the account ceases at age 18. Unless the transferor clearly expresses an intent for the account to continue for the longer period and this can lock the UTMA until the beneficiary is 25.
What Type of Assets Can I Transfer into the FUTMA?
Any form of asset titled in Florida, or assets held by a Florida resident elsewhere, can be shifted to a UTMA account. This includes cash, stocks, bonds, mutual funds, life insurance, intellectual property, as well as titles to both real and personal property. These transfers are irreversible and can be executed through gifts, wills, or trusts. Additionally, a decedent’s personal representative holds the authority to appoint a custodian and transfer estate property to a UTMA account, though judicial sanction is mandatory for values exceeding $15,000.
What Happens If the Custodian Dies? How Can I Change Custodians?
The scenario of the custodian’s death before the distribution to the minor presents significant challenges. In such instances, access to the account becomes inaccessible, and the minor is compelled to await the designated age to assert ownership of the property. Often, obtaining a court order becomes necessary to appoint a new custodian. Nonetheless, many state statutes permit a personal representative or trustee to designate a successor custodian.
In conclusion, the Florida Uniform Transfers to Minors Act (FUTMA) provides essential provisions for safeguarding the financial future of minors in the event of unforeseen circumstances. Establishing a plan under FUTMA offers parents peace of mind by ensuring streamlined asset transfers and consistent jurisdictional standards among states. If you need assistance setting up FUTMA, schedule your 15-minute call here to begin securing your child’s financial well-being.