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Checks with Your Name C/F Child Under NY UMTA
Posted by: JamesW, May 30, 2017 04:20PM
Kaye,

I have received checks from an insurance payment intended to fill a child-support obligation in my divorce agreement. Given some of the concerns about UTMA accounts (apart from the fact that it doesn't really meet the "child support" intention of the agreement) I was wondering what my options for depositing the checks are? The children will receive money outside of this, and I hope to preserve/grow as much of it as possible for their eventual benefit, but we have current debts/bills related to their home, living that I also need to address. Do I have the option of depositing a check written as "Under NY UTMA" to a less restrictive account? I gather that much of this really comes down to "who will object" and I am confident that won't be the children but I wanted to make certain I wasn't just doing the default and making future flexibility impossible.

Thanks!

James

Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, May 30, 2017 10:48PM
IT is very unusual that a child would get payments as part of a divorce ....be sure of your fact pattern! OR explain a bit....l

In general, a check made payable to junior with you as custodian needs to go into an account so designated, a UTMA.

90 seconds later or whenever funds are good, you as custodian are free to withdraw some funds or all the funds for the child's needs ..NOT your needs as parent or custodian .

Funds in a UTMA or directly in child's name are a horrible idea IF downstream you might anticipate need based financial aid for college

Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, May 30, 2017 11:29PM
BE ultra careful of details ...generally in NY a transfer to a UTMA does NOT satisfy ones duty , if there is one, to pay child support...see NY Estate and Probate code 7-6.14'

Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: JamesW, May 30, 2017 11:52PM
Thanks, I appreciate both your insights.

And yes, it is an odd turnabout. We had waved formal "child support" and were sharing time/expenses 50/50. The insurance requirement in the agreement was meant to ensure that neither parent had to shoulder 100% of the expenses alone.

Adding "under UTMA" in the insurance policy undermined that concept, but what would divorce be without it's misinterpretations & micro-battles... It would be awesome. That's what it would be.

I think I'll take my chances with my children suing me as we've got a wonky cesspool & if I have to do time to get that fixed, I'll use the time to read.






Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, May 31, 2017 12:13PM
IF you mean something like reimbursement for medical expenses I don't follow why it's an issue as a UTMA matter....just reimburse yourself. So far it reads like kids would have zero leverage to sue you.

I'd not have a lot of funds in a UTMA come time College rolls around , empty it in advance , and think thru who is to be the custodial parent for aid purposes under FAFSA rules of the time.

50/50 works if incomes and times are about equal..if things change ...then be prepared to get/need a formal child support provision . Child support runs thru age 21 in NY.....If your budget is stressed over a septic repair I'm a bit nervous that you might have done a pennywise pound foolish deal with EX.

Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: JamesW, May 31, 2017 01:02PM
Thanks! Yes, I probably could have been a better negotiator with my Ex, but as this is her life insurance payout my channels for arguing the fairness of it all are limited and perhaps missing the larger picture.

The budget is stressed, cleared out a 401k to buy a fixer-upper in their school district as she had moved out to a nearby town and I wanted to keep their lives as stable as possible. But I'm still happy with the decision and will find a way to make it all work.

You're comment about child support (21) vs UTMA (18) does seem important though. I have a great relationship with my children and they are receiving far more through her estate (under a different trustee) but without wanting to get into a scuffle with her estate it does seem as though a more litigious fella would see that as an important detail to hammer out.


Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, May 31, 2017 05:48PM
You may be reading dated info ..the transfer age for a UTMA is 21 in NY and most places ....was 18 in NY under older UGMA law.

IT is odd that an estate has any duty to pay child support...explain that one ? IF Mom funded a trust for benefit for child ..that's a horse of different color....explain?

AS an aside , a trust for a child is a total killer as to future need based financial aid re College ....need to make it go away by some lawful cooperation ...

Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: JamesW, May 31, 2017 07:46PM
So sorry, you are right, 21/21.

Uncertain about how it works, my ex had an obligation to setup insurance to meet this article of the agreement below. And yes, college financial aid is going to be a challenge (I suppose for a good reason).

1. Until the emancipation of all three Children, each party shall maintain, in full force and effect, a life insurance policy on their life having a total death benefit of approximately Seven Hundred Fifty Thousand ($750,000) Dollars. The parties acknowledge that they shall maintain the Children as equal beneficiaries on their respective policies, with the other party as trustee for the Children. In the event the either party dies prior to the children being emancipated, the life insurance proceeds will be used in lieu of child support for the children. Once the children are emancipated, the parties' obligation to maintain life insurance pursuant to the terms of this agreement shall cease.


Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, May 31, 2017 10:17PM
AS posted, why are not you the other parent as per language of the agreement the trustee?


Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, May 31, 2017 10:46PM
IF there is about $750,000 in the pot you might want to be a bit more proactive as to how well it is being managed ...and how well it is invested....a couple of well chosen funds within the Vanguard stable probably do at least 10%! Per year....and that's a lot of cesspool repairs

The rules are real aid killers and the rules as to what counts varies among FAFSA and CSS users ...and change a bit ...currently it's a 2 year lookback on income and a current snapshot of counted assets .....there is a lot of misinformation out there....but currently a massive shift from trust assets to a UTMA/529 plan cuts the asset count 50% under FAFSA .and they produce no counted income .at least until distributed ...and use of non qualified annuities works under FAFSA but they are tax inefficent when it comes time to get out

THe rules for a trustee in NY are likely a good bit more liberal than the rules for a guardian ....


Re: Checks with Your Name C/F Child Under NY UMTA
Posted by: Drewremedy, June 1, 2017 01:33AM
As an aside..what kind of 1 year return , after expenses, has this 750000 or so pot earned ? ( I'm a Lousy inattentive picker of funds in Vanguard stable so update me on how well your pot manager has done ?)





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