Minor Beneficiary

[Guest mrtnoc]

I have a minor (age 9) who is entitled to 50% of his grandmother’s account ($7,000). My document does not address what to do in the event of a minor child beneficiary however I have read multiple recourses that state the monies should be given to the guardian for the benefit of the child, and it should be placed in a UTMA account until the child comes of age (21). Is this correct? Also, does the guardian need to be court appointed or can the parents be named the guardian by the Trustee?

The beneficiary lives in New Jersey.

[J Simmons]

In most states--and I suspect New Jersey included--a minor child's guardian is his parents unless a court has appointed someone else. Under the version of UTMA adopted in my state (Idaho), the plan trustee could transfer the $7,000 to the parent (if an adult) if the plan trustee determines that the transfer to the parent is in the minor's best interest and it is not prohibited by the plan trust provisions. Because it is under $10,000, under the Idaho version of UTMA, there would be no need to first get court authorization.

[Guest mrtnoc]

Do you hve a link to a specific website that deals with the specific requirement of each state? I am currenty in Florida (which I am familar with), however the beneficiary is in New Jeresy.

[Bird]

FWIW - our plans have this language:

DISTRIBUTION IN EVENT OF LEGAL INCAPACITY: If any person who is entitled to receive a distribution of benefits (the “Payee”) suffers from a Disability or is under a legal incapacity, payments may be made in one or more of the following ways as directed by the Administrator: (a) to the Payee directly; (b) to the guardian or legal representative of the Payee’s person or estate; © to a relative of the Payee, to be expended for the Payee’s benefit; or (d) to the custodian of the Payee under any Uniform Transfers to Minors Act or under any Uniform Gifts To Minors Act. The Administrator’s determination of the minority or incapacity of any payee will be final.

I think the UTMA/UGMA route is best; the custodian would have some obligation to spend it on the minor's behalf.