UTMA Questions

[kdubs923]

Hey smart MMers, hope you don't mind me jumping in.

I recently found out that my grandmother had set up a UTMA account with my name on it way back when. Her intention was to give it to me when I turned 21. Due to complicated family stuff, she did not hand it over. She recently passed so my uncle told me about it. I guess it was finally tell me about it or it would go to the state (again, complicated family stuff, so we hadn't spoken in 20+ years). 

I had never heard of a UTMA account. Would she have been paying taxes on this? I assume I will be taxed on this if/when I withdraw the cash. My initial google results mentioned something about a kiddie tax rate, but I/my parents definitely didn't pay anything on an account we didn't know about. It looks like she put in ~$5K, it's now valued at about $20K.

Anything else I should know about UTMA accounts?

As an aside, how do I not feel guilt about taking money from someone that really to me, is just a random lady? I mean, $20K is a pretty substantial amount of found money. I can definitely find a good use for it. But it doesn't feel like I deserve it. Feelings are weird.

[puppylove64]

My kids have an utma each. They get a 1099 every year for the interest and dividends, but don’t have to file tax returns because the income is under the filling limit. Once they reach the age per my state, the account is just an investment account in their name.

Yours is likely now just a regular investment account. You might need to amend some tax returns for tax income it was making over the years. Have you ever gotten a notice from the IRS saying you owed additional taxes?