| If you hold on the right to take the money back, you better consult
a lawyer to get all the details right (if it's possible at all).
I consulted a lawyer for a trust I set up. I got the impression that
if you have the right to take money back you can't treat the income on
that money as income to your children--it stays your income.
So while I'm not a lawyer, etc., I don't think you have the law right.
-John Bishop
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| In Massachusetts, you can use the money in the UGTMA account only for
the benefit of the named child. That means private school for said
child is OK; buying a bigger house for yourself is not.
Remember, you have to provide an annual accounting to your child, so
you want to set a responsible example of prudent investments and
expenditures, right? In my own case, I thought it was instructive to
have to explain to my child why Daddy thought Miniscribe was a great
company -- groan!
Remember also, at age 18 in Massachusetts, the balance in the account
must be transferred to the child. He can use it for a college, or he
can blow it on a Porsche.
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| Pertinent portion of Section 4:
"The custodian shall pay over to the minor for expenditure by him, or
expend for the minor's benefit, so much of or all the custodial
property as the custodian deems advisable for the support, maintenance,
education and benifit of the minor in the manner, at the time or times,
and to the extent that the custodian in his discretion deems suitable
and proper, with or without court order, with or without regard to the
duty of himself or of any other person to support the minor or his
ability to do so, and with or without regard to any other income or
property of the minor which may be applicable or available for any such
purpose."
"To the extent that the custodial property is not so expended, the
custodian shall deliver or pay over to the minor on his attaining the
age of eighteen years or, if the minor dies before attaining the age of
eighteen years, he shall thereupon deliver or pay it over to the estate
of the minor."
"The custodian shall keep accounts of all his transactions with respect
to the property held by him as custodian and shall exhibit his accounts
at least once each year to the minor if over the age of fourteen years;
if the minor be not over fourteen, the custodian shall exhibit his
accounts at least once each year to a parent of the minor if different
from the custodian himself, or if not different, to the legally
appointed guardian of the minor, if any, or in the absence of a parent
different from the custodian or of a guardian, the custodian shall
exhibit his accounts at least once each year to an adult member of the
minor's family ..."
"A custodian who is not compensated for his services shall not be
liable for losses to the custodial property unless they result from his
bad faith, intentional wrongdoing or gross negligence or from his
failure to maintain the standard of prudence in investing the custodial
property provided in this chapter."
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