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Michigan Credit Union League Home » Information Services » Publications » Contact » 2005 » 1st Quarter » You Asked Us  

“You Asked Us” is a regular feature of Contact Magazine, featuring questions frequently directed to MCUL Regulatory Issues by member credit unions. Questions are chosen for publication on the basis of timeliness and those most frequently asked, with answers provided by MCUL staff. If you have a specific question you’d like to see addressed in a future “You Asked Us,” send it along with your name and the name of your credit union to MCUL Regulatory Issues, “You Asked Us,” P.O. Box 8054, Plymouth, MI 48170-8054. Questions can also be e-mailed to or faxed to 734.420.1540. Names and credit unions will remain confidential; this information is needed in case the question requires further clarification.

Q: What is the Uniform Transfers to Minors Act (UTMA)?

A: The Michigan Legislature passed the Uniform Transfers to Minors Act (UTMA) in December 1998 (MCL 554.521 – 554.552). The law enables an adult, personal representative, or trustee to transfer several types of property to a minor. Though the minor holds legal title to the property, the transfer does not place the property in the minor’s control. The transferor (donor) appoints himself or herself, another adult, or a trust company as custodian to maintain and control the property for the benefit of the minor. The actual property transferred to the custodian on behalf of the minor is called custodial property.

Q: Did the Uniform Transfers to Minors Act (UTMA) replace the Uniform Gifts to Minors Act (UGMA)?

A: Yes, the UTMA replaced the UGMA, which was repealed as part of the UTMA. The UGMA was more limited as to the types of property that could be transferred to a minor. The old law authorized only gifts of securities, life insurance policies, annuities and money.

Q: Under the UTMA, what other types of property can be transferred to the minor?

A: The UTMA expanded the list to include other property interests, real property and titled personal property, such as automobiles and mobile homes.

Q: Do accounts that involve minors have to be designated as UTMA accounts, or can they be set up as regular accounts?

A: Accounts can be set up either way. You are not required to open the accounts up as a UTMA account unless the adult contributor specifically requests this type of account.

Q: Can the minor make any withdrawals from a UTMA account?

A: No. Unlike an account where the minor is a joint owner, the minor does not have access to the funds until age 18, unless authorized by the custodian for the use and benefit of the minor.

Q: At what age under the UTMA must the property be transferred to the minor?

A: In most situations, transfer of custodial property must occur when the minor turns 18. However, the UMTA states that a transferor may delay the turnover date past 18 under certain conditions, but not later than the minor’s 21st birthday.

Q: When the minor on a UTMA account either reaches either 18 or the age specified in the UTMA account agreement, what does the credit union need to do?

A: The credit union should block access by the custodian on any further transfers, otherwise the responsibility lies with the custodian of the account to request the transfer of the account to the minor. MCL 554.546 reads, “Except as provided in section 27, the custodian shall transfer in an appropriate manner the custodial property to the minor or to the minor’s estate upon the earlier of the following:

a) The minor becoming 18 years of age with respect to custodial property transferred under section 8, 9, 10, or 11.
b) The minor’s death.”

Section 27 allows the time to be extended up to 21 years of age if, when the account is opened, the age on the UTMA account is specified in the transfer execution agreement by using the words “as custodian for (name of minor) until age “X” under the Michigan uniform transfers to minors act.”

Q: What is involved in the transfer of ownership for UTMA accounts?

A: For accounting and tracking purposes, once the custodian has authorized the transfer of funds to the “minor” named on the account card, the credit union may wish to close out the account and transfer the funds to the account of the “minor’s” choosing. In the event that the custodian does not transfer the property when the minor reaches the age specified in the UTMA agreement, credit unions are advised not to allow the custodian to conduct any more transactions, as they no longer have the authority under the Act. If no transfer is made and there is a dispute, the credit union may want to hold the funds until an appropriate court order is made.

Q: Can the member list his/her spouse as a joint custodian?

A: No, he/she cannot. Under the UTMA, the account can only have one custodian and one minor per account. However, UTMA permits the designation of a successor custodian. If the parent listed as custodian is concerned that no other person is on the account in the event something unforeseen happened to him/her, he/she could designate a spouse as successor custodian and he/she would be able to access the account once the parent listed as custodian became incapacitated.

Q: We have a number of UTMAs that were opened years ago. According to our records, the minors for whose benefit the accounts were opened up for are now well passed the age of 21. It is our understanding that when the minor reaches the age of 21, under the UTMA, the custodian is required to turn those funds over to the minor. This has not happened. Can we turn the funds over to the minor since they have passed the age requirement listed in the law?

A: No, it is not your responsibility to police these accounts. However the credit union should block any further action on the account from the custodian, as they no longer have rights to the account except to turn the funds over to the named minor. When UTMA accounts are opened, the person opening the account is responsible for using the funds for the benefit of the minor. The credit union does not need to get involved with monitoring how the accounts are used — or anything else for that matter. In the scenario above, the custodian is the one who should turn the funds over to the minor.

To view or obtain a copy of the Michigan Uniform Transfers to Minors Act in its entirety, visit the following link on the Michigan Legislature Web site.

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