TN 39 (01-08)

A. Introduction

The Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) are model laws developed and approved by the National Conference of Commissioners of Uniform State Laws and then proposed for adoption by all States through their State legislatures. Adoption of the model law is optional by the States and each State may make amendments to the Act. The UGMA was developed in 1956 and revised in 1966. The UTMA was finalized in 1986.

1. Uniform Gifts to Minors Act (UGMA)

All States and jurisdictions in the United States adopted the UGMA in some form. This Act allows donors to make gifts to minors that are free of tax burdens. Since the inception of the UGMA, many States have added amendments to expand the types of property that can be made the subject of a gift under the Act. As a result, the UGMA lost some of its original uniformity. Consequently, individuals making transfers under their State’s UGMA could not be assured that other jurisdictions would recognize the transaction and subject it to rules that were the same or substantially similar to the rules in their state.

2. Uniform Transfers to Minors Act (UTMA)

The UTMA offers all States the expansive approach some of them had already taken and makes a variety of other improvements over the UGMA. Under the UTMA, any kind of property, real or personal, tangible or intangible, can be transferred to a custodian for the benefit of a minor. Under UGMA, only gifts of cash or securities are permitted. The UTMA covers not only outright gifts, but also other transfers, such as payment of debts owed by a third party to a minor and transfers of property from trusts or estates. In some cases the minor’s own assets can be transferred to an UTMA.

The UTMA incorporates the provisions of UGMA and broadens the scope of the law to include not only gifts, but also transfers to minors. For clarity, UTMA will be used in place of UGMA throughout this section. The UTMA is only effective in states that have adopted it (as of this writing, only South Carolina and Vermont have not adopted the UTMA) and each State may modify their UTMA statute. The instructions in this section provide general guidance on the model Act and thus regional instructions and regional program staff should be consulted when evaluating specific UTMA issues.

B. Definitions

1. Donor

An individual who transfers money or property to a custodian on behalf of a minor.

2. Custodian

An adult designated by nomination to receive, maintain and manage custodial property on behalf of a minor beneficiary.

3. Custodial Property

Any interest in property transferred to a custodian on behalf of a minor beneficiary under the UTMA, including any income or proceeds resulting from that transferred property.

4. Minor

An individual who has not yet attained the legal age of majority as established by state law.

5. Adult

An individual who has attained the legal age of majority as established by state law.

6. Transfer

A transaction that creates custodial property.

7. Irrevocable Transfer

A transfer in which the donor relinquishes all control of the custodial property and retains no legal authority to revoke his/her release of the custodial property.

C. UTMA Provisions

Under the UTMA legislation:

• a donor makes an irrevocable transfer of money or other property to a minor;

• the transfer, plus any income it generates, is under the control of a custodian until the minor reaches the age of majority established by State law;

• the minor does not have the right to liquidate property until he or she reaches the age of majority established by State law;

• the custodian has discretion to provide to the minor or spend for the minor's use and benefit as much of the assets as he or she deems equitable; and

• the minor automatically receives control of the assets upon attainment of the age of majority established by State law.

D. Policy – Regarding Income and Resources

1. Custodian

a. Income

Additions to or income generated by the principal after an UTMA transfer are not income to the custodian who has no right to use the additions or income for his or her own support and maintenance.

b. Resources

UTMA assets are not the custodian’s resources for SSI purposes because he or she cannot legally use any of the funds for his or her support and maintenance.

2. Donor

a. Income

Additions to the principal that occur before an UTMA transfer may be income to the donor. For example, if the donor is also a deemor who received rental income and added it to a child’s UTMA funds, we would have to consider the rental income as income subject to deeming.

b. Resources

Money and assets transferred under the UTMA are no longer the resources of the donor beginning with the month after the month of the transfer. However, the transfer of resources provision may apply if the donor is an eligible individual or individual’s spouse (see SI 01120.205E.1.a.).

3. Minor

a. Before Age of Majority is Attained

While still a minor under applicable State law, UTMA property should be treated as follows:

• UTMA property, including any additions or earnings, is neither income nor a resource to the minor unless it can be considered a device similar to a trust (see SI 01120.205E.2.);

• the custodian’s UTMA disbursements to the minor are income to the minor in the month of disbursement and a resource beginning the following month;

• the custodian’s UTMA disbursements on behalf of the minor may be treated as ISM to the minor if used to make certain third party vendor payments for the minor’s support and maintenance (see SI 00835.360).

b. Once Age of Majority is Attained

In the month the minor attains the age of majority under applicable State law, all UTMA property becomes available to him or her and is subject to income counting. The UTMA property becomes subject to resource counting the following month.

REMINDER: Field offices should check regional POMS supplements to SI 01120.205 to confirm the legal age of majority in their respective States.

E. Related Policy

1. Transfer of Resources

a. Transfers on or After 12/14/99

If the donor is an eligible individual or individual's eligible or ineligible spouse, the transfer of resources provision may apply to UTMA donations that were transferred for less than fair market value on or after 12/14/99 (see SI 01150.110) unless the UTMA is considered a device similar to a trust (see SI 01120.201B.5.) or another exception to transfer of resources applies.

b. Transfers Before 12/14/99

Donations transferred before 12/14/99 do not affect SSI eligibility but may affect eligibility for Medicaid (see SI 01150.100).

2. Device Similar to a Trust

If funds belonging to the minor are placed in an UTMA account belonging to the minor, the account may be considered a device similar to a trust (SI 01120.201B.5.). For example, a minor’s parents place the minor’s funds in an UTMA account for the benefit of the child. If you determine that an UTMA account should be considered a device similar to a trust, evaluate the account under the trust rules in SI 01120.200 – SI 01120.203.

3. UTMA Account Is Closed Before Beneficiary Reaches the Age of Majority

Although transfers under the UTMA are irrevocable and convey legal title to the minor, you may encounter a situation where the custodian takes possession of the UTMA property or closes the UTMA account just prior to the time the minor reaches the age or majority contrary to State law. This may be an attempt to manipulate the UTMA provisions to establish or maintain SSI eligibility. If an UTMA account is revoked or closed by the donor or custodian before the minor reaches the age of majority, the action you take will depend upon whether fraud or similar fault exists.

NOTE: Fraud or similar fault development is not necessary if the UTMA account has been closed because all of the funds have been disbursed by the custodian to or the benefit of the minor.

a. Fraud or Similar Fault is Found

If fraud or similar fault is found (see SI 04070.020), presume that no gift was intended and count the value of the account as a resource to the donor back to the date the gift was transferred to the minor. Use the date of eligibility if the gift was transferred prior to the date of SSI eligibility. If a parent is involved, this may result in resource deeming to the minor for the entire period.

b. Fraud or Similar Fault is Not Found

If fraud or similar fault is not found, count the gift as income to the donor in the month the UTMA account was revoked and a resource beginning the next month. Remember that the rules of administrative finality do not permit counting the gift back to the date of revocation if revocation occurred more than two years prior to the date of the affirmative action in writing (see SI 04070.015B.)

F. Development and Documentation

1. Initial Claims

During an initial claim, UTMA accounts should be processed as follows:

• Request a written document from the custodian or donor (e.g., a deed, appropriate titling on a certificate of deposit, savings passbook, etc., reflecting it is being held by an adult custodian under a State Uniform Transfers to Minors Act, other transfer document referring to an adult custodian with reference to the State UTMA or other documentation that satisfies your State UTMA statutory requirements) to confirm an allegation of an UTMA transfer.

• If there is no document designating an UTMA transfer, do not develop further. Instead, proceed as if there had been no allegation of an UTMA transfer.

• If there is evidence that questions the validity of an UTMA account, follow regional instructions regarding legality of gifts or transfers. In the absence of such instructions, consult with your Regional Office (RO) program staff. If necessary, the RO staff will request the documentation needed for possible submission to the Regional Office of the General Counsel.

• If there is a valid UTMA account and the minor is an SSI recipient, see regional instructions to confirm the State's legal age of majority. Also, input “UTMA” to the CG field, followed by the account balance and the month and year in which the minor will attain majority. For example, in a State where the legal age of majority is 21, a $6,000 UTMA transfer to a child born June 10, 1990 would read: “UTMA,6000,0611.”

2. Posteligibility

a. Develop UTMA only in the following situations:

• there is an allegation of a new UTMA transfer since the last redetermination;

• there has been a withdrawal from an existing UTMA account; or

• the minor has attained (or is about to attain) the age of majority.

b. UTMA Transfer in CG Field

If the CG field already reflects existence of an UTMA transfer, develop and document the situations in a. above only when material. If the current allegation is that no UTMA transfer exists, resolve the discrepancy.

c. No UTMA Transfer in CG Field

If the CG field does not reflect existence of an UTMA transfer, follow 1. above to develop an UTMA transfer that is newly alleged or discovered.

NOTE: Routine development of increases in an established UTMA account is discretionary. Such increases do not affect eligibility or payment, but you may wish to update information in the CG field or the Remarks section of the SSR.

G. Example

1. Situation

During a prior redetermination, the FO established that Gertrude Smith irrevocably transferred under the UTMA, the sum of $10,000 to her granddaughter, Emma Smith, a 14-year-old SSI beneficiary. At the current redetermination, Emma's mother, who is the custodian of the account, volunteers that she withdrew $1,000 from the account to pay for a 3-week vacation for Emma at a summer camp with special facilities for disabled children.

2. Analysis

Regional instructions confirm that there are no legal prohibitions in the State that preclude UTMA withdrawals for a minor's benefit. The CR determines that the withdrawal is not income to Emma because the custodian did not disburse it to her nor does it represent a third party vendor payment of food or shelter. The CR updates the CG field to show the new UTMA balance.

H. References

• SI 00835.360, When to Charge ISM from Third Party Vendor Payments

• SI 01150.110, Period of Ineligibility for Transfers on or After 12/14/99

• SI 01150.100, Processing Resource Transfers Occurring Before 12/14/99

• SI 01120.200, Trusts Established Prior to 1/1/00, Trusts Established by Third Parties and Trusts Not Subject to Section 1613(e) of the Social Security Act

• SI 01120.201, Trusts Established by an Individual on or after 01/01/00

• SI 01120.202, Development and Documentation of Trusts Established on or after 1/1/00

• SI 01120.203, Exceptions to Counting Trusts Established on or after 1/1/00

• SI 04070.015, Reopening SSI Determinations

• SI 04070.020, Fraud and Similar Fault - SSI