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Author: malakito Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121598  
Subject: Re: UTMA question Date: 3/5/2001 12:41 PM
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Is there any way I can change an utma to another type of account?

I'm assuming that the background to this question is that you don't like the UTMA account for some reason. I think the most common reason here is the "What if they buy a new car with their college fund?" concern.

I did something that you may want to consider, but read the law carefully to make sure it applies to you. Instead of paying my child's private school tuition from my current income, I withdrew money from his UTMA account to pay the tuition and then deposited the same amount from my current income into a different account earmarked for his college education. In this way, there is the same amount of money earmarked for college expenses, but I gradually drain the UTMA account. You may be able to find expenses which are large enough to use for this purpose that meet the UTMA account rules. As I remember them, the withdrawals had to be for the benefit of the child.

A side benefit of this is that in our particular case, this enabled us to realize about $700 in capital gains, the majority of which are not taxed because my son is a minor. These CG's would have been taxed had we held onto the UTMA and later realized them, say, when he was a freshman.

--malakito.
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