Monday, August 10, 2009
Help Me Howard: Child's Trust Fund
A child's trust fund is just that: a fund you trust, cannot be touched, but how would you feel if your child's account was drained? Not by you, not by a person, but by the bank. Can a bank take your child's money if they are in a dispute with you? Here's Help me Howard with Patrick Fraser.
WSVN -- This is Robert Shapiro on 7 News today, and this is Robert Shapiro on Channel 7 23 years ago.
Robert Shapiro: "And SVN caught wind of it, and they came out about these two young kids who were making money, and they did a nice little report on us."
Robert was a kid then, now he has his own child.
Robert Shapiro: "She is the light of my life. Everyone who meets my daughter loves her to death."
Maya is 2, and like most little children, occasionally gets cash or checks from relatives, so her parents opened a bank account for her.
Robert Shapiro: "We opened a UTMA account, which is a children's trust account. It's an account that is a trust for a child."
UTMA stands for Uniform Transfers to Minor Act, a trust fund for a child with a parent's name on it as well.
Robert Shapiro: "And the parent is not allowed to use that money. Those funds are only for the child. The moment those funds are deposited, they belong to the minor child."
For nearly two years, Maya's little account grew by $10 or $20 at a time. Then Robert opened Maya's latest statement and saw her account had been drained.
Robert Shapiro: "They took $475.64."
"How much did they leave?"
"They left my daughter three pennies. They took all but three cents of her money."
The culprit, the bank.
Robert Shapiro: "They took it all except for three cents."
The reason: Robert used to have his business account with the same bank but switched to a different bank. Later, a customer disputed a charge, and the bank sided with her. Since Robert's account was closed, the bank took it from Maya's trust fund.
Robert Shapiro: "They just took it from my daughter's account without alerting me whatsoever."
Robert contacted the bank and got transferred from one person to another.
Robert Shapiro: "And one person after the next after the next, told me there is nothing you can do, this money belongs to us now."
Robert's name was on the account as the custodian for his daughter, and since the law blocked him from touching her money, he thought it blocked the bank from taking it as well. They told Robert, wrong.
Robert Shapiro: "They basically told me, in other words, tough. They said the money was due to our bank from you. Your name appeared on the bank account, so we are taking that money."
So, Howard, if your account is short or, like Robert's closed, can a bank take money from your child's account?
Howard Finkelstein: "In this type of an account, the money does not belong to the parent, it belongs to the child. The bank cannot touch it no matter what they say because the law prohibits it."
When I contacted the bank, a spokesperson told me that we apologize, that this should not happen to an UTMA account. The bank also contacted Rob and returned the money to Maya's account.
Howard says, if your child has a bank account, and your name is on it, there are ways to protect their money.
Howard Finkelstein: "If your child's money is not in a protected trust account like this, and you fear you might bounce a check and your child lose their money, protect their savings account by moving it to a bank where you don't have an account because one bank cannot touch money in another bank."
Maya has her money back. Not that she was ever too concerned, I mean, she is too busy talking about Dora.
Robert Shapiro: "My daughter is a delight. She is adorable. She is very, very talkative."
Patrick Fraser: "The only thing left, Robert owes the bank the $476. He says they were wrong to rule in his customer's favor, so he is going to small claims court. If he loses there, then he will pay the bank the money."
Put your trust in the wrong place? Wanna save some time? Contact us. We don't kid around, you can bank on it.