Both Kansas and Missouri have adopted a Uniform Transfer to Minors Act (UTMA), which provides a simplified way to irrevocably gift or transfer property to be held in custodianship for the benefit of a child. For the purposes of these laws, a child is any person under the age of 21.
The donor appoints a custodian to manage the property in the account, maintain proper records and ensure that the money is used only for authorized purposes. Typically, the custodian will be a parent or legal guardian of the child. However, any adult (including a person not related to the child) may serve as the custodian.
Present and irrevocable transfers of property to a UTMA account for a child may qualify for an annual Federal gift exemption. While the funds are accumulating in the account for the child, the income tax liability for the interest earned is generally transferred to the child. (Amounts and eligibility may change; consult with a tax advisor). The taxpayer identification number used to report interest earnings is the child's social security number.
The custodian may spend portions of the UTMA account for the use and benefit of the child. When the child reaches the age of 21, the custodian transfers control of the account to the child. Under specific circumstances, the minor may be entitled to receive certain property upon reaching the age of 18. Please consult with legal counsel regarding any proposed early withdrawal by the minor.
Any type of Capitol Federal® savings or certificate account may be set up as a UTMA account for a child. Accounts are generally governed by the state law where they are established, regardless of the state of residence of the child or the custodian.
The information provided is only a partial summary of the Kansas and Missouri UTMA. Before making a transfer, you should consult with your personal attorney or tax counselor regarding the advisability of establishing a UTMA account. You can review UMTA laws at:
Additional information about the Kansas and Missouri UTMAs is included in IRS Revenue Rulings, which can be found on the IRS website.