Transfer from minors bank accts

[johnnycakes]

We are in the process of filing chapter 7. Case should be filed within the next week or so, but I have a lingering issue.

Our children have their own UTMA savings accounts where they are the owners and I am the "custodian". We have always treated these accounts in the proper "custodial" manner, i.e no transfers/withdrawals to our account.

One of our children spent time hospitalized this year. Fortunately through work, I have a hospital indemnity policy which pays $150 a day for any family member who his hospitalized.

We received a check from the insurer for his hospital stay, and upon the advice of our attorney, placed the check directly into the UTMA account of our child that was hospitalized.

Since it was a pretty sizable check ($3000+), are we going to end up having to fight the trustee over it?

Currently we have paid all of his medical expenses out of our own account, and would like to transfer some money from the UTMA account to reimburse our account. However we don't want to fuel the fire so to say.

In any case, we will not do any transfers prior to filing, but what are the chances of this becoming an issue for the trustee?

Our attorney thinks it shouldn't be a problem. That opinion sure fills me with confidence..

[Spagal]

Working within the investment community I can tell you once you transfer the money to your child's UTMA it becomes property of the child. Transferring money out of the UTMA for any reason other than "for benefit of the child" isn't within the proper use of the custodianship. Clearly you have medical expenses for the child and it would be within the proper use but I wonder why the atty would have you put a check made payable to you in the UTMA acct in the first place. It seems that would muddy the waters and look like your were trying to conceal funds esp if now you want to take monies out for reimbursement.

I have to agree, I don't think this was sound advice and I could see where a trustee may wonder why you "gave" the funds to minor just to take them back at a later date.

[johnnycakes]

... I wonder why the atty would have you put a check made payable to you in the UTMA acct in the first place. It seems that would muddy the waters and look like your were trying to conceal funds esp if now you want to take monies out for reimbursement.

I have to agree, I don't think this was sound advice and I could see where a trustee may wonder why you "gave" the funds to minor just to take them back at a later date.

Yea, I'm not really all that thrilled now. When the check came in, we didn't "need" the money per se, but we knew there were going to be ongoing medical costs. So, we wanted to put it away in a manner where it wouldn't be seized by the trustee, but was legal. Perhaps it would have made more sense to put it into a "medical spending account" set up for our son rather than the UTMA account.

I guess at this point we can hope that either the trustee accepts the rationale that it was proceeds due to his hospitalization, went into his account, and will go towards his future care - or that he/she doesn't go looking into the history of our kid's accounts.. Other than those options I guess we're going to have to wrestle the trustee for the money.

In any case I think I'll hold off on any reimbursement until I know what is going to happen.