utma

Court Restricted ("CR") UTMA

• What is a “CR” UTMA account?

  A court restricted UTMA provides parents, grandparents, and others a simple way to invest settlement recoveries for a minor. A custodian will be named by the court who has the fiduciary duty to manage and invest the assets on behalf of the minor until they become of legal age. These accounts offer numerous market-based investment options and the flexibility to use funds for educational or non-educational expenses. The Court restriction adds a level of safety by not allowing funds to be transferred out of the account until the minor reaches certain ages, without a subsequent court order. Unlike a structured settlement annuity, these funds are not guaranteed against loss and have risk.

  
  

• Minimum initial investment 

  $5,000.00 minimum. Negotiable for long term attorney clients. 

  
  

• Contribution age limits & withdrawals 

  Funds can generally be invested and withdrawn as follows; invested by age 18 and withdrawn by age 21. These ages are subject to state law. Funds are restricted from the custodian’s access and cannot be used at whim. Funds are only available to the minor after reaching the age of majority in their state.

  
  

• Taxation of earnings

  Typically, earnings are taxable to the minor under their social security number (“ssn”) and could be subject to higher tax rates, like a trust.

  
  

• Ownership of assets (for financial aid)

  The assets and any income generated in the CR UTMA are the student's, and this may have a negative impact when the beneficiary applies for financial aid or scholarships.

  
  

• Fees

  Vary by account. Our standard fee is 1.00% annually, in addition to administrative and strategy fees which are charged by the custodian or fund manager. Total fees should not exceed 1.50%, annually, even on the smallest investment accounts.