UTMA: Michigan/Indiana *very long*

[mrrock2009]

What is the name of your state (only U.S. law)? Indiana/Michigan

Multiple UTMA accounts was set up in the state of Michigan while the beneficiary has always resided in Indiana. First off, which state acts would be applicable? Both states in their act state that the laws apply if the trust was conceived in that state and/or the minor resided in the state, in which the minor has not.

Second, a inheritance was to be received by the minor from the great grandparents in the amount of $40,000 in 1997. These funds were placed into two high risk UTMA accounts in 2000. $38,000 of shares were purchased while $2,000 is assumed to be consumed by brokerage fees/etc. In 2001 the trust lost $20,000 due to being in these accounts so the funds were transfered into another account where it lost an additional $4,000 until in 2002 the funds were placed into a money market account and retained value. This was at company "Janus"

Here is where it gets weird.

In 2003 all shares were redeemed at Janus and accounts closed and at another unknown to us totaling to the amount amount of $20,000. We learned of this first by duplicate past tax transcripts then master account histories from the company who held these high loss accounts. We have failed to locate the second company who shows up (on capitol gains and losses sheet) as "Global Equity Fund".

BUT, in 2002 an account was setup at Gabelli Investments (another high risk account) in the amount of $6,000. No redemptions were made from Janus during this year so it brings the question, where did this money come from? We have master accounting sheets and no major transactions except for a random $1,300 redemption was made in 2004. The account sits open to this day and we are working on taking it over since my wife is over 18, there is no age by donor for custodianship to terminate, and asset information was never released by custodian to beneficiary. It is strange that this account (which generates a 1099) was created shortly before the minor would file her own taxes and learn of her $6,000 trust as the custodian has also said that only $6,000 remained because "it got lost in the market".

But wait, where did the capitol come from to open the "global equity fund" since it was also not conceived from the original inhertiance?

Another issue is that all of these accounts have been placed under her social security number and she has had to pay taxes on dividends since conception. A trust MUST manage its own taxes UNDER LAW so it MUST have its own TAX ID NUMBER.

The custodian has failed numerous times when directly requested to release accounting information since minor was age 14 (legal age to request accounting) and NEVER has released accounting information YEARLY as required by LAW.

The custodian has failed to transfer control accounts under direct request of beneficiary when the minor reached age 18, as the custodian must transfer control by law unless there is a legal age for custodianship to terminate placed on the accounts (which proof would be required by instrument of a trust document stating donor's intentions). There is NO age for custodianship to terminate on said accounts and the custodian has lied numerous times that she cannot have her accounts until she is 25.

Furthermore, a trust document or any other instrument has never been released even under direct request, as one is required to be released under law!

The custodian has released (what little funds she has to the beneficiary) for schooling via personal checks. Such is not legal since custodian MUST make unique and document able transactions in any assets transferred/released to the beneficiary. (it so happens that the trust companies provide free checks to disperse funds to the beneficiary so it can be documented properly...).

Gabelli is providing us with instruction of submitting documentation to make a new account under my wife's name and transferring the funds to effectively remove the custodian from the account as she refuses and is not reachable as of late. Is this the proper way of doing this without waiving my wife's rights? Who would be responsible for inuring any penalties from having to transfer into a new account versus the custodian cooperating and removing herself from the account (as required by law)?


I personally see numerous direct violations of the Indiana AND Michigan UTMA Acts and further speculate that the beneficiary's tax id number (social security number) has been used to mask personal investments by the custodian as also the custodian using the money for her own benefit (it is known that her housing company boomed during this time AND money from her sister's trust was missing around 2000-2003 as well.)

The beneficiary CANNOT file her 2008 taxes since the 1099 for the trust fund has not been released (regardless if it legally has to be in its own tax ID to negate this from happening in the first place).

She cannot as well receive federal student aid to return to college since she has massive "incomes" from these accounts.. Would the custodian be liable for damages since she cannot go to college since her social security number was placed on the accounts unlawfully?

Any advice would be helpful. We are in process of hiring an attorney but feel with the information we have, the attorney would need to be "schooled" in UTMA laws since no lawyers locally know of it, let alone talk to us.

One last thing, since the shares were redeemed and placed into the custodian's personal possession, is this in volition of the trust being irrevocable regardless if we learn of additional accounts at a later date (although this seems HIGHLY unlikely)?

Thank you very much for spending the time to read this!

[anteater]

You are flopping around talking about a "trust" and "UTMA accounts." They are not the same.

Another issue is that all of these accounts have been placed under her social security number and she has had to pay taxes on dividends since conception. A trust MUST manage its own taxes UNDER LAW so it MUST have its own TAX ID NUMBER.

If they are UTMA accounts, then it is proper that the accounts are under her SSN and that she must report any income. She is the owner of the accounts. Our laws only state that she can not exercise all the rights associated with ownership until the accounts are released to her.

She cannot as well receive federal student aid to return to college since she has massive "incomes" from these accounts.. Would the custodian be liable for damages since she cannot go to college since her social security number was placed on the accounts unlawfully?

Once again, if they are UTMA accounts, it is not "unlawful." And this is a downside to UTMA accounts.

[mrrock2009]

Thank you for your prompt reply. I have successfully retained an attorney that is knowledgeable in UTMA acts.