<p>hello, is there anyone out there who has had an UGMA account set up for their children? If so I need advice about the following.
Recently I discovered that my ex husband has been raiding and stealing from my children's UGMA accounts for his own personal benefit. Has anyone ever had this happen and can you explain a bit about the rules governing the payback to these accounts? oh and let me tell you my daughter is 18 so shouldn't the account be turned over to her? My son is still a minor.</p>
<p>I'm the custodian of a comparatively small UTMA (Uniform Trust For Minors) account for my son, in New Jersey -- I think it's similar to UGMA accounts, but, at least here, it doesn't get turned over to him until he's 21. Not that I expect that there'll be anything left in it by then -- it's all going to be used towards his tuition.</p>
<p>My ex is custodian of a similar account, and, I discovered, took approx. $1000 out of it for personal uses last year (<em>all</em> of the costs of a short vacation with my son, not just my son's half -- not that the account was ever intended to be used to pay for my son's summer vacations in the first place.) After my request that the money be put back was categorically refused, I decided not to pursue it -- the disruption, and lawyers' fees, and the emotional damage to my son of having his parents at each other's throats just like the "good old days" before the divorce was final, simply weren't worth it for that sum of money.</p>
<p>Donna</p>
<p>^^ OP, I think you need to consult with a lawyer. The rules vary by state. I believe in most states the child-beneficiary of an UGMA or UTMA account is supposed to acquire full control over the assets upon reaching the age of 18, but in some states it's higher. </p>
<p>Basically what would be required to set this matter right if your ex refuses to do it voluntarily is a civil lawsuit by or on behalf of your kids seeking a court-ordered accounting, restitution, and possibly additional damages (e.g., punitives). It's a costly and potentially ugly process and it may not be worth the hassle if the amounts involved are not large, but a good lawyer may be able to get him to cough up the money without taking on the additional expense of a lawsuit which he would likely lose. If he's been looting the kids' accounts there are also possible criminal violations, as well as tax fraud if he didn't report the converted funds as taxable income to himself, but you almost never see public prosecution of these things. Still, a good lawyer might be able raise that specter to get him to take his private duty to make restitution seriously. If you are going to take legal action, you should also be aware that there are statutes of limitations on these things; your kids may be unable to recover later if they fail to take timely action. See a lawyer to get legal advice as to how best to proceed.</p>
<p>If you don't want to go to the trouble and expense of hiring a lawyer, and if he refuses a polite request to return the funds, I would threaten to report him to the "authorities." I doubt the local district attorney will be interested (you could try) but the IRS might be.</p>
<p>I was thinking the same thing as NJres -- threatening to "drop a dime" on the Ex may get his attention. On the other hand he may call your bluff. So I'd suggest that you try a letter from a lawyer first. Yes, that will cost some money.</p>
<p>I'm trustee of UGMA funds set up for education of my daughters. With the benefit of hindsight, the benefits of these funds did not outweigh the effort required to maintain them. JMHO.</p>
<p>Get a lawyer and talk to the bank.</p>
<p>Is it "looting" if the money is paying for the child's expenses? From what I understood from my broker, we could use KidX's UGMA acct for any KidX expense, from clothes to camp fees to college tuition even if the UGMA wa originally set up with the intent that it would be for college. The broker also said to keep any receipts from such expenditures to prove that it was spent on KidX.</p>
<p>My research, prior to setting up the UGMA accounts, was that the money could not be used for any expense that was the legal responsibility of the parent. So the money could be used for camps or orthodontia, but could not be used to pay school physical education fees or tooth repair -- for example. Under this guideline, clothes would be OK only if they went beyond necessary clothing. And oh yeah, be sure to keep the receipts.</p>
<p>Here's some of the language:
[quote]
A custodian may deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order and without regard to (i) the duty or ability of the custodian personally or of any other person to support the minor, or (ii) any other income or property of the minor which may be applicable or available for that purpose.</p>
<p>
[/quote]
</p>
<p>In my understanding, the money needs to go to the child directly or to an expense that will benefit the child. The questions tend to come up when the money is spent for the family's benefit as a whole rather than for the one named child. I have never heard any requirement about the money not being allowed to go expenses that are the legal responsibility of the parent. The money in these accounts are for the care of the named child. If you spend with that thought in mind, the expenses are probably fine. There is absolutely no requirement that the money needs to be spent on education. It's always a good idea to keep track of how money is being spent when it's in an account like an UGMA.</p>
<p>Most UGMAs end at age 18, at which point custodianship terminates and the bank or brokerage institution should be directed by the custodian to turn over all assets to the child. Laws vary by state on how this turnover actually happens - some don't require the custodian's signature. Did the XH raid the UGMA before or after your daughter turned 18?</p>
<p>Is your XH the custodian of the accounts, or are you? If your XH is the custodian, you can notify the financial institution that he is acting improperly, which might cause the financial institution to freeze the accounts and prevent further actions by the custodian.</p>
<p>My brokerage company is pretty careful about how funds are taken out of my kids' UGMA accounts. For transfers, the funds can only go to another account titled the same as the UGMA, ie owned by the child. When cash is taken out, the check is written to myself and my child (which of course could be deposited directly into my bank account, so it's not really restricted). My point is that certain procedures are in place. You can check the company that holds your kids' UGMAs and ask them what their procedure is for withdrawals. See if you can get your XH's name off your son's UGMA, and make sure that only your daughter has access to hers.</p>
<p>Many thanks to all of the parents out there. The info was very helpful. The lawyer has been contacted and also the IRS.</p>
<p>In reply to vballmom:
Yes it's been goin on for years. I used the automated line to find out just how much he's stolen. It was Not used for my child's benefit. She got NONE of it which means he's forged her signature. Actually both of thier signatures.
He has stolen in excess of 20K on record. Because my children's account were set up the same way with the ex as custodian.
He has a drinking and gambeling problem and that's where the money has gone. But luckily enough I found a great lawyer who has put a restraining order on thier accounts until we can have custodianship changed.
Many thanks for all your help..just need to find out what the age limit is in Iowa.</p>
<p>alexeli, it looks like Iowa is a state where the age of majority is 21.</p>
<p>He might not necessarily have forged your daughter's signature - it's possible he could have cashed checks withdrawn from the UGMA with only his signature. But clearly the money has been improperly withdrawn, and you did well to freeze the accounts and find a good lawyer. Best of luck to you.</p>
<p>I think vballmom is right about the signature-forging issue. Certainly for my son's UTMANJ account, I can write checks on it simply by signing "Donna [last name] as custodian for [son's name], UTMANJ." No need for my son's signature.</p>