AboutJohn D Smith, CFP Expertise I can answer detailed questions regarding mutual fund investing, retirement planning, education planning and related financial planning/investment issues. I have a B.S. degree in Financial Planning & Counseling. I am also a Certified Financial Planner (CFP) and have performed fee only investment management and financial planning services for the past 11 years.
Expert: John D Smith, CFP Date: 5/15/2008 Subject: UTMA Distributions
Question Hi John. As you know, an any UTMA contributions are considered irrevocable gifts and can not be used for the benefit of anyone but the minor. If a custodian of an UTMA account were to send instructions to a transfer agent requesting that they liquidate an account where the minor is 3 months from the age of majority and make the check payable to themself (the custodian) while not including the FBO: (minor) that's included in the account registration, this would appear to be embezzlement. My question is would the TA be responsible for policing that? Would this be considered a violation of SEC regulation or is their only job to adhere to the client's request?
Answer When you request $$ to be paid to the custodian you are required to sign an affidavit stating the $$ is going to be used for the minors benefit. Once the institution has this signed affidavit they have no other way to monitor this, nor do they care at this point. I hope this helps.
