UTMA transfer when guardian must be appointed anyway?
Hi,
I have been reading on this forum about the usefulness of using UTMA to name IRA beneficiaries who are minors (I’m gathering that it avoids having a court name a guardian for the funds for the minor). I wanted to ask a few follow up questions about this idea: if my spouse and I died and left our IRAs to the (minor) kids, we would already have a court involved to declare a guardian for them (both for custody and property passed to them through the will). In that case, does using UTMA for transfer of the IRAs still make sense? We would have the same person (my brother) act as guardian and custodian of all of our estate for the kids (including the IRAs). Would it complicate things for him to have some property pass through UTMA and some through probate (i.e., would it be better to name the kids as beneficiaries without using UTMA)?
Thanks for any advice!
Bridget
Permalink Submitted by mk foss on Mon, 2011-05-02 16:40
Using the UTMA would not complicate things when other assets must go through a probate proceeding. The UTMA is not subject to probate – which means that any delays and costs incurred in connection with the probate proceeding will not apply. Probate fees are based on the value of the assets and not all probate judges (although that term varies by jurisdiction). One of my clients passed away without naming a beneficiary on one IRA. The court ordered that the IRA be paid out to his two adult children 1/5th per year and that the attorney be paid from the proceeds 1/5 per year on a very small account because no one involved understood the 5 year rule.