UTMA account

[joanmcq]

Client is custodian of her grandkid's UTMA accounts (she gifted stock to them), but the 1099s are under her SSN, not the grandkid's. Can anyone think of a reason for this? I think 'she wants to pay the tax not the kids' but the kids won't be taxed; the amount of dividends are minimal. My thought is to nominee the divs. Anyone have any thoughts? I haven't seen too many of these accounts in a long while, but if I recall correctly, they are a completed transfer?

[Gail in Virginia]

The only concern I can think of, Joan, is that while there won't be any tax based on the amount in these accounts, would there be a tax issue when added to other accounts the kids may have?  And do the grand-kids, or their parents, know about the accounts?  Maybe she doesn't want one of her children to pressure her to let the kids have the money now for some purpose. She might want the accounts to stay intact even while the grand-kids are in college (or until college, or whatever.)

 

I think that they are considered a completed transfer, although in VA the registration is usually shown as UGMVA and could be slightly different. 

[Lion EA]

Kiddie Tax could come into play on kids' returns, requiring info from parents' returns.  Pretty sure the SSN should be the kids' SSNs.  Will hurt them come FAFSA time, though.  Think I would nominee and try to get brokerage to change SSNs for 2015.

[joanmcq]

Yes, I've no idea of the parents or the grandkid's financial situation. I finished working up the client and she's in the 0% capital gain/qualified dividend rate, so she won't actually be paying any tax on them. It's that time of the year when all the weird situations are come in.....