Q: Can a lawyer help to remove a custodian on UTMA acct for not allowing use of funds for school?
Grandparent set up UTMA accts for both of my children which are valued close to million each. Grandparent is estranged from grandkids and refuses to use money in acct for schooling. Children cant even get financial aid (FAFSA) as value in UTMA accts would be held against them. Is there any legal action we can take?
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A: The ability of a custodian to make withdrawals from a UTMA account before the child reaches the age of majority is limited. Generally, unless there is some demonstration that a child's parent is unable to pay for their education, it is improper for a custodian to withdraw funds. However, there is no right to the funds before the child turns 21 in New York unless the grandparent set it up for disbursement at 18. Unfortunately, the main downside is that it is considered the child's property and may make the child ineligible for financial aid although they may still be able to get student loans.
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