The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Kids, UTMA accounts, feuding parents||Date: 1/9/2013 8:43 PM|
|Author: makasha||Number: 117330 of 121061|
Oh lordy this situation has the potential to turn so ugly, so easily. I will try my darndest to keep emotion out of it and stick to the facts.
<background>DF has 2 boys, teenagers. The boys think their mother has savings accounts for them (which, in fact, she does--they are UTMA accounts and she is the custodian, FBO each boy). The boys think the savings accounts are their respective "car money" for when they buy their first cars though. [I saw a statement of one of the accounts once, after Ex had borrowed and then repaid $1000 from one boy's account; that is when I saw the UTMA and custodian info.]
DF's ex-wife (Ex) owes DF approximately $4000 in back child support. This is the figure the county has given DF thru their calculations, based on Ex's paychecks, which were provided by her employer to the county. Coincidentally, each UTMA has a ~$2000 balance. </end background>
This idea just crossed DF's mind this evening: what if Ex raids the UTMA accounts in order to pay back child support to DF? DF has been claiming the same kid as a dependent on his taxes and Ex has been claiming the other, ever since the divorce. This is per court order.
Is there any way on earth that DF could end up responsible for paying taxes and/or penalty on the UTMA for the boy he has been claiming as a dependent? DF is NOT the custodian on either account, but will that make a difference to the IRS? What if Ex has a payout check made out to DF?
I hope against hope this doesn't go down the way I can see it easily going down....
Thanks for any help.
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|