On July 1, 2017, Wyoming adopted significant changes to the Wyoming Uniform Transfers to Minors Act (UTMA). The UTMA was enacted in 1987 as a replacement of Wyoming’s previously adopted Uniform Gifts to Minors Act, and remained virtually untouched prior to the amendments enacted in 2017.
What is an UTMA Account?
An UTMA account is a financial account owned and managed by an adult custodian for the benefit of a “minor,” an individual who has not attained the age of eighteen (18) years old. Wyo. Stat. Ann. § 14-1-101(a). In general, Wyoming law does not allow the distribution of substantial property to a minor without the oversight of an adult. Wyo. Stat. Ann. § 3-3-108. For example, the required oversight may be accomplished by a court appointed conservator or an adult custodian.
Why Create an UTMA Account?
An UTMA account can be a valuable tool for parents, grandparents, trustees, personal representatives, and others to transfer money or property to a minor without incurring the costs and being subject to the restrictions of a court supervised conservatorship. Of course, it may be necessary for a conservatorship to be established if the property payable to the minor is quite large. However, for payments or gifts to a minor that are of a nominal value (i.e. several thousand dollars), an UTMA account is a great option.
The custodian of an UTMA account is required to take control of the custodial property and prudently manage, invest, and reinvest the property for the benefit of the minor. Wyo. Stat. Ann. § 34-13-125. The custodian has discretion to distribute the UTMA account property to the minor, or for the minor’s benefit, as the custodian considers advisable. Wyo. Stat. Ann. § 34-13-127(a). In addition, the minor, or the minor’s guardian, has the right to petition the appropriate court to demand distribution of the custodial property if the court considers it advisable for the use and benefit of the minor. Wyo. Stat. Ann. § 34-13-127(b).
What Has Changed?
The UTMA statutes previously required the complete distribution of an UTMA account to the minor beneficiary upon the minor attaining the age of either eighteen (18) or twenty-one (21), depending on the manner in which the account was created. Under the revised UTMA, the age at which distribution of the account must occur can be extended up to age thirty (30) under the following circumstances:
- The extended time for transfer to the minor is specified in the transfer at the time the UTMA account is created; or
- The custodian may extend the custodial term by giving the minor written notice and informing the minor that he or she has the right to compel distribution. If the minor does not exercise the right to compel distribution, the custodial term may be extended as indicated in the custodian’s notice.
The ability to extend the term of a custodial UTMA account creates new estate planning opportunities. In particular, this expansion has implications for annual gifting, saving for educational expenses, and preserving funds for spendthrift beneficiaries.