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Uniform Transfers to Minors Act (New Jersey)

Last Reviewed: June 2020

Please note that this is a specific discussion on UTMA minor accounts. For a general discussion of accounts for minors, please see the Minor Accounts topic.

The Uniform Transfers to Minors Act (UTMA) is a New Jersey State law which allows custodial accounts to be established for minors with the money belonging to the minor when he reaches an age between 18 and 21, as specified by the person setting up the account. These accounts may be offered by credit unions.

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Uniform Transfers to Minors Act (New Jersey): Summary

A custodial account is established by a grantor for the benefit of a third party. As soon as the account is established, title to it is vested in the third party. Because accounts established under the Uniform Transfers to Minors Act are vested in the minor, you must determine what provisions of the New Jersey Uniform Transfers to Minors Act applies to this situation. This will depend on the size of the account and whether the recipient of the account proceeds is a family member. Upon the proof of death of the original custodian and an acceptance by a successor custodian, the entire account may be transferred to the successor custodian. No further documentation is necessary.

A custodial account is established with the Social Security number of the minor because the minor has title to the account as soon as it is established. All interest in that account will be credited to the minor. When the grantor establishes the custodial account, he has the option of designating himself as custodian.

A Custodial Account Signature card should be used for all custodial accounts.

Only one person may be a custodian of a particular account, and the account may only be set up for one minor.

Requirements for Custodial Accounts

  1. Include appropriate language in the signature card:
    "as custodian for (name of minor) under the New Jersey Uniform Transfer to Minors Act";
  2. Open the account in the minor’s name;
  3. Use the minor’s social security number;
  4. Have the custodian sign the signature card.

The New Jersey Uniform Transfer to Minors Act relieves credit unions of all liability with regard to the custodian’s authority to act with regard to the account. Thus, credit unions should allow the custodian to open the account, transact business with respect to the account, and close the account, without further inquiry. The only time a credit union would ever refuse the custodian access to the funds in the account, or to close the account, is:

  1. When the credit union has received a court order; or
  2. When the minor presents proof to the credit union that he/she has attained the age of majority

Custodian Dies, Minor Survives:
The New Jersey Uniform Transfer to Minors Act assigns custodianship to the minor's guardian unless a successor custodian has previously been designated.

Minor Dies, Custodian Survives:
The Custodian shall transfer the custodial property to the minor's estate.

Age of Minor
For the purpose of the Uniform Transfer to Minors Act, a minor is defined as a person under the age of 21, unless the person establishing the account designates it as another age between 18 and 21. In the case of a minor reaching adulthood, the account belongs to him even though the custodian has not taken the necessary steps to remove himself. If the custodian dies, the account belongs to the adult (formerly the minor) without any further documentation. If the adult dies, the custodian has no right to deal with the account and it should be treated as a decedents single account, owned by the adult.

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Uniform Transfers to Minors Act (New Jersey): Additional State Considerations

The New Jersey Uniform Transfers to Minors Act sets restrictions on how and when assets may be distributing to minors and applies to custodianships established in trusts as well as in wills.  46:38A-1.

A person having the right to designate the recipient of property transferable upon the occurrence of a future event may revocably nominate a custodian to receive the property for a minor beneficiary upon the occurrence of the event by naming the custodian, followed in substance by the words: "as custodian for       (name of minor) under the New Jersey Uniform Transfers to Minors Act."  § 46:38A-6.  The nomination may name one or more persons as substitute custodians to whom the property must be transferred, in the order named, if the first nominated custodian dies before the transfer or is unable, declines, or is ineligible to serve.  § 46:38A-6.  The nomination may be made in a will, a trust, a deed, an instrument exercising a power of appointment, or in a writing designating a beneficiary of contractual rights which registered with or delivered to the payor, issuer, or other obligor of the contractual rights.  § 46:38A-6.

The nomination of a custodian does not create custodial property until the nominating instrument becomes irrevocable or a transfer to the nominated custodian is completed.  46:38A-7.  Unless the nomination of a custodian has been revoked, upon the occurrence of the future event the custodianship becomes effective and the custodian shall enforce a transfer of the custodial property.  46:38A-7.

Section 4:38A-19 provides the requirements for the creation and transfer of custodial properties, such as a security, money, real estate, etc.  An instrument in the following form satisfies the requirements of a custodial property transfer:

"Transfer Under the New Jersey Uniform Transfers to Minors Act

I, ............................. (name of transferor or name and representative capacity if a fiduciary) hereby transfer to ....................... (name of custodian), as custodian for ........................ (name of minor) under the New Jersey Uniform Transfers to Minors Act, the following: (insert a description of the custodial property sufficient to identify it).

Dated: .............................................................

....................................................................

(Signature)

.......................... (name of custodian) acknowledges receipt of the property described above as custodian for the minor named above under the New Jersey Uniform Transfers to Minors Act.

Dated: .............................................................

....................................................................

(Signature of Custodian)"  § 46:38A-20.

A transfer may be made only for one minor, and only one person may be the custodian. All custodial property held under this chapter by the same custodian for the benefit of the same minor constitutes a single custodianship.  46:38A-22.

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Uniform Transfers to Minors Act (New Jersey): Laws & Regulations

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