Children’s Custodial Accounts and Divorce

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Some parents establish bank accounts to save for their children’s future. One very common type of savings account is a PUTMA account, that is: an account established under the Pennsylvania Uniform Transfer to Minors Act account. The nature of these accounts is important in accurately establishing the extent of the marital estate to be divided between divorcing parties.

A PUTMA account is an account that is owned by a minor, but that has an adult as the custodian. Under the PUTMA, a minor is one who is less than 21 years old. Money placed into a PUTMA account immediately becomes the property of the minor. Different custodial accounts such as education savings accounts might treat deposits into them differently than PUTMA accounts do. A deposit into a PUTMA is considered an irrevocable gift to the minor.

Because the PUTMA and case law dictates that deposits into PUTMA accounts are irrevocable gifts to the minor, these accounts should be excluded from the marital estate and not divided between the parties. These accounts also should not be considered to be the separate property of the custodian because the custodian does not have any ownership interest in the account, but merely holds the account for the minor’s benefit.

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