I have UTMAs for both of my two children. Can I use the money in these accounts to pay for camps and visits to colleges?
Great question. Let's start with a little background information on UTMAs and UGMAs. In most states, minors are not permitted to directly own stocks, bonds and mutual funds so parents have generally established UTMA and UGMA accounts to hold these assets for their children. Any money contributed to the account is considered and irrevocable gift and once the contribution is made, the child is the legal owner of the assets in the UTMAs. The child can withdraw all of the money in the account once they reach legal age (which varies from state to state -- in Massachusetts, UTMA assets belong to the child without restriction at age 21.)
If a parent makes a withdrawal from the UTMA, it must be for the benefit of the child. Everyday expenses like food, clothing and shelter would not count because a parent is expected to provide those things but "extras" like summer camp, a new computer, a car to get to a job, and expenses related to college visits would certainly be acceptable.
There are no forms to fill out when you make a withdrawal from a UTMA but I urge you to keep a record of any withdrawals you make and save the camp and computer invoices so you can "prove" that the withdrawal was for a legitimate expense.
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