A UTMA account Question

aparentoftwo
Thu, 31 Mar 2011 10:40:26 +0000

I live in New Jersey and have an UTMA account for my high school senior. He’s going to college next year and I’d like to start spending his expenditures (e.g. airfares, laptop, etc.) from this account. Since he’s only 18 and in NJ he doesn’t own this asset until 21, what’s the best way to do this? Should I

a) just keep withdrawing from this account; or

b) close the UTMA account and transfer the cash to a new checking account under my name; or

c) close the UTMA account and transfer the cash to a new checking account under my son’s name

What are the pros and cons, and the tax consequences of each approach? As you can tell, I’m really confused about the tax rules on UTMA. Any advices will be greatly appreciated.