Question

The following features of an UTMA account set up in a child's name by a parent to pay for the child's college education are true EXCEPT:

	a.	The parent loses control of the account when the child reaches the age of majority (18 or 21, depending upon the state)
	b.	The child may qualify for less financial aid in college
	c.	Investment income is generally taxable to the parent until the child is 24 years old
	d.	If child chooses not to go to college, the parent can revoke the account

Answer 1

UTMA Account

An UGMA/UTMA account is a custodial account established at a financial institution for a minor child and managed by a parent or other designated custodian. It is established under either a state's Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA).
UGMA and UTMA accounts allow to invest for a child’s education while taking advantage of the child’s potentially lower tax rate.

Feautures of UTMA Account
A) Upon reaching the age of majority under the state UGMA/UTMA law usually 18 or 21, depending on the state the child (minor) gains control of the assets and may use them as he/she sees fit. So the given sentence is right as parent looses the control over asset when the child reaches the age of 18-21 ( depending upon the state )
B) It is also right that the child may qualify for less financial aid if the asset is in hands of the parents.
C) It is also true that in case of UTMA, investment income from the assets are generally taxed in the hands of parents upto 24 years og age.
D) It’s important to note that all assets transferred under UGMA and UTMA law represent irrevocable transfers. This means that the child owns the assets even if he or she decides not to go to college.

Answer: D