Uniform Transfers to Minors Act (Florida)

Last Reviewed: May 2023

Please note that this is a specific discussion on UTMA minor accounts. For a general discussion of accounts for minors, please see the Minor Accounts topic.

The Uniform Transfers to Minors Act (UTMA) allow an adult to: (1) contribute to a custodial account (an account in a minor's name created at the credit union for the benefit of a minor, with an adult as custodian) without the legal need to establish a trust or name a legal guardian, and (2) transfer real estate and other tangible and intangible assets to a minor.

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Uniform Transfers to Minors Act (Florida): Summary

History of the Uniform Transfers to Minors Act
Uniform Gift to Minors Acts (UGMA) refers to laws that are adopted by most states to allow an adult to contribute to a custodial account (an account in a minor's name created at the credit union for the benefit of a minor, with an adult as custodian) without the legal need to establish a trust or name a legal guardian. Custodians are responsible for managing the funds in the Minor's account.

The UGMA was originally enacted to address the legal problems encountered by both the minor and the transferor when gifts of securities were made to a minor. The Act provided an effective method to transfer assets to minors without the transferor incurring tax liability: which, prior to the Act, could be achieved only through the use of a trust. (Putting money into a UGMA account can adversely impact the minor's chances for future financial aid, because financial aid officers weigh children's assets more heavily than parents' assets.)

The UGMA laws were later amended to Uniform Transfers to Minor Acts (UTMA). These laws expanded the UGMA laws to include the ability to transfer real estate and other tangible and intangible assets to a minor.

A custodian has a fiduciary duty to prudently manage the UGMA/UTMA account, but once the minor reaches the age of majority (21), they have complete and total rights to the account. The account assets are the legal property of the minor, and the custodian or parent or guardian has no legal control over account. Withdrawals from the account are taxed at the minor's rate.

What does the UTMA mean to credit unions?
The Act provides a transferor with a number of methods (e.g., gift, trust, will, etc.) to transfer custodial property to a minor, that preclude the minor from gaining access to the custodial property until he or she (depending on the nature of the transfer) reaches the age of twenty-one (21). If the subject of the transfer is money, the transfer may be made by paying or delivering it to a credit union for credit to a UTMA account.

When a transfer of money is made to the minor via a UTMA account in accordance with the requirements of the Act, the transfer gift is irrevocable, and the funds (custodial property) are indefeasibly vested in the minor (but the custodian has all the rights, powers, duties, and authority provided by the Act, and neither the minor nor the minors legal representative has any right, power, duty, or authority with respect to custodial property except as provided by the Act). Under the Act, the money is treated as a gift to the minor and the dividends and/or interest earned is the minors and not the transferors or the custodians. Therefore, the dividends and/or interest earned will be taxable to the child and not the adult.

By making a transfer (gift), the transferor incorporates in the disposition all the provisions of the UTMA and grants to the custodian, and to any credit union dealing with a person designated as custodian, the respective powers, rights and immunities provided for in the Act.

If your credit union does not offer this type of account, not only are the members being denied a particular service, but the credit union is losing the potential deposit

How does the UTMA Law affect Florida Credit Unions?
Florida Statute: 710 codifies the "Florida Uniform Transfers to Minors Act."

A FUTMA account is established when money is paid or delivered to the credit union and credited to an account in the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: "as custodian for (name of minor) under the Florida Uniform Transfers to Minors Act";

The Florida Uniform Transfers to Minors Act (FUTMA or Act) is the Florida law which allows a person to make a gift of money, or tangible or intangible property to a minor by transferring the money or property to a custodian, which (depending on the nature of the transfer) the custodian manages until the minor has reached the age of twenty-one (21).

The Act provides a transferor with a number of methods (e.g., gift, trust, will, etc.) to transfer custodial property to a minor, that preclude the minor from gaining access to the custodial property until he or she (depending on the nature of the transfer) reaches the age of twenty-one (21). If the subject of the transfer is money, the transfer may be made by paying or delivering it to a credit union for credit to a FUTMA account.

When a transfer of money is made to the minor via a FUTMA account in accordance with the requirements of the Act, the transfer gift is irrevocable, and the funds (custodial property) are indefeasibly vested in the minor (but the custodian has all the rights, powers, duties, and authority provided by the Act, and neither the minor nor the minors legal representative has any right, power, duty, or authority with respect to custodial property except as provided by the Act). Under the Act, the money is treated as a gift to the minor and the dividends and/or interest earned is the minors and not the transferors or the custodians. Therefore, the dividends and/or interest earned will be taxable to the child and not the adult.

By making a transfer (gift), the transferor incorporates in the disposition all the provisions of the FUTMA and grants to the custodian, and to any credit union dealing with a person designated as custodian, the respective powers, rights and immunities provided for in the Act.

If your credit union does not offer this type of account it should consider doing so because, it is a service your member's need and because the credit union is losing potential deposits.

What do credit unions need to do to comply with the UTMA?
When a UTMA account is established at the credit union, the social security number of the minor should be furnished, and the name of the minor should be used when reporting the dividends and/or interest to the Internal Revenue Service (IRS).

There may be gift and estate tax consequences to the transferor, depending on the amount of the gift and the proximity of the gift to the death of the transferor. Nevertheless, though the credit union may advise the member that the interest/dividends paid on the account will be reported under the minor's social security number, the credit union should not give its members tax advice! It is the member's responsibility, either alone or with the help of professionals, to do their own tax planning and determine the tax consequences of using a UTMA account. Furthermore, the credit union should always preface any discussion of the tax consequences of utilizing a UTMA account with its members as follows:

The dividends and/or interest paid on the UTMA account will be reported under the minor's social security number, though you should consult with your own attorney as to the tax consequences that result from using such an account, as the credit union does not give tax advice.

The credit union's duties and responsibilities, with regard to establishing, maintaining, and closing UTMA accounts for its members as transferors-custodians, is a clear and simple four-step process:

The credit union should have the member open the account as follows: {name of minor} by {name of transferor-custodian}, Custodian;
The credit union must ensure that the transferor-custodian (i.e., the member) uses the minors social security number (SSN), signs his or her name certifying that the SSN is correct, and that the credit union uses the minors name and SSN for IRS reporting purposes;
The credit union's account card must contain the language as custodian for (name of minor) under the Florida Uniform Transfers to Minors Act, and
The credit union adheres to all the wishes of the transferor-custodian who created the account, and allows no other party (e.g., the minor, the minors parent(s) or guardian(s) or any other third party) to access the account unless it receives a court order indicating otherwise.

When the credit union (in good faith and without court order) acts on the instructions of, or otherwise deals with any person purporting to make a transfer or purporting to act in the capacity of a custodian and, in absence of knowledge, it is not responsible, (Florida Statute 710.118) for determining:

the validity of the purported custodian's designation;
the propriety of, or the authority under the UTMA for, any act of the purported custodian;
the validity or propriety under the Act of any instrument of instructions executed or given by the person purporting to make a transfer or by the purported custodian, or
the propriety of the application of any property of the minor delivered to the purported custodian.

In short, the Act relieves the credit union of all liability with regard to the transferors-custodians authority to act and the custodians acts himself or herself. Therefore, the credit union should allow the transferor-custodian to open the UTMA account, transact business with respect to the account, and close the account, without further inquiry. The only time the credit union would ever refuse the custodian to access or close the account, or honor any other third party's (e.g., the minors, minors parents or guardians) request with respect to the account, is when it has received a court order indicating the same.

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Uniform Transfers to Minors Act (Florida): Additional State Considerations

The Florida Uniform Transfers to Minors Act directs the process for the creation of custodial accounts for gifts, bequests, or other transfers to minors. Fla. Stat. § 710.101 et seq. Minors are individuals under the age of 21. § 710.102(12). Once the minor reaches the age of 21, the custodian must transfer the custodial property to the minor/minor’s estate. § 710.123(1).

UTMA accounts may be created by a gift or exercise of a power of appointment, or by a transfer from an estate/trust. § 710.105. To illustrate, custodial property of money is created and transferred when money is paid or delivered to a broker or financial institution for credit to an account in the name of the transferor, followed by the words, “as custodian for (name of minor) under the Florida Uniform Transfers to Minors Act.” § 710.111(1)(b).

An instrument in the following form satisfies the statutory requirements for a transfer under the UTMA:

I, (name of transferor or name and representative capacity if a fiduciary) hereby transfer to (name of custodian) , as custodian for (name of minor) under the Florida Uniform Transfers to Minors Act, the following: (insert a description of the custodial property sufficient to identify it).

Dated:

(signature)

(name of custodian) acknowledges receipt of the property described above as custodian for the minor named above under the Florida Uniform Transfers to Minors Act.

Dated:

(signature of custodian).” § 710.111(2).

A transfer may be made only for one minor, and only one person may be the custodian. § 710.112.

Responsibilities of a Third Person

A third person, such as a credit union, acting in good faith, may act on the instructions of or otherwise deal with any person purporting to make a transfer or purporting to act in the capacity of a custodian, and, in the absence of knowledge, is not responsible for determining:

The validity of the purported custodian’s designation;
The propriety of any act of the purported custodian;
The validity of any instrument or instructions given by the person purporting to make a transfer or by the purported custodian; or
The propriety of the application of any property of the minor delivered to the purported custodian. § 710.118.

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Uniform Transfers to Minors Act (Florida): Checklist

The following checklist should assist the credit union in complying with the requirements of the Uniform Transfers to Minors Act and the Florida Uniform Transfers to Minors Act. (To be in substantial compliance, all answers should be yes.)

Has the transferor-custodian opened the account in the minor's name, with the minor's SSN, and certified the account with his or her own name?
Does the minor's name match the SSN for IRS reporting purposes?
Has the credit union included the appropriate language in its account card in order to facilitate Uniform Transfers to Minors accounts?
Does the credit union train its employees to obey the member's (transferors-custodians) requests unquestionably, and not allow any other party to access the account unless it receives a court order indicating otherwise?