FUTMA Accounts and Transfers

The Florida Uniform Transfers to Minors Act (FUTMA) (Florida Statutes Sections 710.101-710.126) provides an easy way to transfer property to minor beneficiaries. It allows for the transfer of assets, including money and real estate, to a custodial account for a minor beneficiary.

Pursuant to FUTMA, an adult can open a custodial account for a minor by titling the account in their name as "custodian for (designated minor) under the Florida Uniform Transfers to Minors Act."

The designated custodian has the duty to manage the assets in the FUTMA account for the benefit of the minor beneficiary until he reaches adulthood (either age 18 or 21, depending on how the designation is worded). Once the beneficiary reaches the age of majority, he becomes owner of the account.

FUTMA accounts are simple alternative to setting up a trust, which typically involves considerable time and expense.

FUTMA Asset Protection

Property in a FUTMA account is legally considered to belong to the minor beneficiary. FUTMA assets are not available to satisfy debts of the custodian of the account. Therefore, by setting up a FUTMA account for a minor, a custodian can ensure that those assets pass to the designated beneficiary free of any creditor claims against the custodian that arise later.

An important caveat is that a custodian's transfer to a FUTMA account could be challenged if the custodian sets up the account after a creditor has already sued him. Under Florida's fraudulent transfer law (Chapter 726 of the Florida Statutes), "a transfer will be held to be fraudulent if it is proven that it was made with the actual intent to avoid paying a creditor."

FUTMA Examples:

1. Bob Blackmon transfers an investment house to his grandson, Todd, by executing a deed that conveys the property to "my son John Blackmon as custodian for Todd Blackmon under the Florida Uniform Transfers to Minors Act."

The property is now held by John for the benefit of his son Todd. John can mortgage or sell the property, but only for Todd's benefit. John's creditors can not seize the property to satisfy his debts. Once Todd reaches the age of majority, he automatically becomes its legal owner.

2. Teresa Alvarez wants to give $50,000 to Melissa Cruz, her 6 year old granddaughter, when she dies. So she places $50,000 into a savings account and writes the following beneficiary designation on the account: "to my daughter Maria Cruz as custodian for Melissa Cruz under the Florida Uniform Transfers to Minors Act."

When Teresa dies, the account passes to Maria, as custodian for her daughter Melissa. When Melissa reaches the age of majority, she becomes the record owner of the account.

FUTMA vs. POD and TOD Accounts

FUTMA accounts offer specific protection from creditors not found in Payable on Death (POD) or Transfer on Death (TOD) accounts. Unlike FUTMA accounts, POD and TOD accounts are owned by the transferor until his death, at which point ownership passes directly to the named beneficiary. For this reason, POD and TOD accounts are vulnerable to seizure by the transferor's creditors until the transferor's death.

Estate Planning with FUTMA Accounts

FUTMA accounts are a handy way leave assets to your minor children and grandchildren. Instead of setting up a complicated trust, you can simply state in your will that you are leaving property "to (custodian name) as custodian for (minor beneficiary name) under the Florida Uniform Transfers to Minors Act."

Contact Florida asset protection attorney John Clarke at (954) 556-8952 if you would like assistance with asset protection or estate planning!