Question regarding out of state inheritance

[TheNJBen]

NJ / VA

I’m in NJ and my daughters received an inheritance where the will was executed in VA and checks mailed to me. The form I had to sign was to create accounts in accordance with the VA UTMA. I created accounts and depositors the checks but the accounts are NJ UTMA, where the only difference is in NJ they take ownership at 18 and it’s 21 in VA. I can still spend on their behalf etc. Do I have to be compliant with VA? In all honesty I’d prefer to be as it helps one not spend her money on bad and it helps both in terms of college financial aid as they technically won’t have the money yet and therefore it won’t have to be reported.

 

[adjusterjack]

What does the will say?

 

[TheNJBen]

What does the will say?

It just allocates money to them. Well technically a percentage of a house sale. It doesn’t give any instructions as to when but the uniform transfer act to minors in Virginia says 21 and NJ say 18 or 18-21 depending on if the custodian was elected in the will or not. Other than my daughters living in NJ, every other part of the will from writing to reading to disbursement has all been in VA and in accordance to VA law.

 

[Mark_A]

The form I had to sign was to create accounts in accordance with the VA UTMA.

Given the form you signed, I would abide by the VA law. It doesn't sound likely that anyone will challenge that, and is the least risky course of action.

 

[Taxing Matters]

NJ / VA

I’m in NJ and my daughters received an inheritance where the will was executed in VA and checks mailed to me. The form I had to sign was to create accounts in accordance with the VA UTMA. I created accounts and depositors the checks but the accounts are NJ UTMA, where the only difference is in NJ they take ownership at 18 and it’s 21 in VA. I can still spend on their behalf etc. Do I have to be compliant with VA? In all honesty I’d prefer to be as it helps one not spend her money on bad and it helps both in terms of college financial aid as they technically won’t have the money yet and therefore it won’t have to be reported.

I haven't read the whole trust document and therefore don't know which state's law will apply in your situation, much less whether you may make any transfer of that trust from state to to a different state. I think you should talk to a probate attorney in VA first. You don't want to make a mistake on this that might come back to haunt you later on. That has the potential for a bad outcome. As you are the trustee you want to be sure what options you have in each state, and for that you don't want to get your answer off a message board forum.

 

[LdiJ]

I haven't read the whole trust document and therefore don't know which state's law will apply in your situation, much less whether you may make any transfer of that trust from state to to a different state. I think you should talk to a probate attorney in VA first. You don't want to make a mistake on this that might come back to haunt you later on. That has the potential for a bad outcome. As you are the trustee you want to be sure what options you have in each state, and for that you don't want to get your answer off a message board forum.

I re-read the initial post and I don't see where this is a trust. It appears to me that the child has inherited money and mom/dad is putting it into a UTMA account with mom/dad as the custodian, but no where do I see anything about a trust.

 

[Mark_A]

It may be possible to have a UTMA created under the laws of a different state than where the beneficiary resides (where the account mailing address is located). I would ask the financial institution about it, since you clearly were instructed to create it under VA UTMA law. If it can't be changed, then the NJ UTMA may automatically revert to the full control of the beneficiary at age 18, regardless of anything else, but not sure.

 

[Mark_A]

I re-read the initial post and I don't see where this is a trust. It appears to me that the child has inherited money and mom/dad is putting it into a UTMA account with mom/dad as the custodian, but no where do I see anything about a trust.

Agree, there is no trust, just a will. The difference is that if the UTMA instructions were in a will, then a probate court "may" (maybe) have issued the document that the OP signed agreeing to create the UTMA according to the laws of VA, whereas a trust is usually not directly administered by a court unless someone files a lawsuit claiming that the trust agreement was not followed.

 

[Mark_A]

I found the following information regarding UTMA accounts on the Fidelity brokerage website. Other financial intuitions may have different rules, so check with the financial institution where the accounts were created:

"Bear in mind, though: UGMA/UTMA brokerage accounts are considered assets owned by the child, which can impact financial aid when applying to college." [the question of financial aid may depend on the college or the financial aid provider]

"At some financial institutions, like Fidelity, the account will be restricted once the child passes the state-mandated age and control has not been transferred. Though it is a mandatory process, it [the transfer] has to be initiated by the custodian. If the account was restricted because of a delay in transferring control, any restrictions would be lifted once ownership was transferred."

https://www.fidelity.com/learning-center/personal-finance/custodial-account-for-kids