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  1. #1
    Join Date
    Dec 2014
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    5

    Default Fradulent Treatment of a UTMA Account in Bankruptcy

    My question involves bankruptcy in the state of: Mississippi

    This may be complicated and involves a couple of different categories but here goes.

    My wife and I fostered a boy hoping to adopt and the state gave us money every month for his care with a directive that a certain percentage be put in a custodial account for him until he turned 18. My wife opened the account as the custodian with his name on the account as well. Only one name can be custodian so I was not able to be on the account.

    Since that time we adopted him and the DHS directive for the UTMA custodial account no longer applied.

    Since that time my wife and I divorced and I retained full custody of my son. The custodial account was not listed in the no fault divorce because I forgot about it until I found the paperwork for it.

    My son and I requested that she turn over the account to me as the full custodian of him and she refused claiming in writing that she sent the money to New Mexico (where she has family) to keep me from getting it and he could have it when he turned 18. My son (who is 15) drafted an official demand letter for her to return his savings account to him or he will sue her for it's return.

    Shortly after this my ex filed for bankruptcy and she listed me as a creditor of an unsecured debt for the amount that was in his savings account.

    Point #1: Under the UTMA rules any assets deposited into a UTMA account are not revocable and any money taken by the custodian must be used for the child's benefit (which did not happen) and is in breach of her fiduciary duty.
    Point #2: This is not a debt owed to me personally meaning I am not a creditor.
    Point #3: The "debt" is listed in her bankruptcy because of the demand letter (which does not have my name on it only my sons) because it is something she "could possibly" be sued for.

    So... here are my questions:
    1: Can this be listed in here bankruptcy like this?
    2: What can I do to stop this from being allowed in her bankruptcy?
    3: Who enforces the UTMA rules on custodial accounts and who can I call to get them to do something about it?

    I went to the meeting of creditors but didn't know what to do. I have talked to several lawyers but they all want like $2500 to do something about it and the account only had $1622 in it. to file a protest in the bankruptcy court would cost like $350 and has a lot of legal junk to sift through to get it right but I cannot afford to fight her and it is wrong what she has done stealing his savings account.

    This is a mess and she is doing this because she is mean and trying to get back at me for divorcing her but it isn't fair to my son who is ready for a car and wants to purchase it with his account money as I cannot afford to buy one for him.

    Please help

    Thank you very much in advance for any and all help anyone can give.

  2. #2
    Join Date
    Oct 2006
    Posts
    16,474

    Default Re: Fradulent Treatment of a UTMA Account in Bankruptcy

    My guess is that the money is already spent. I also suspect that because she is the child's mother, even though you have primary custody, that any action cannot be taken against her until the child is 18 and she doesn't turn over the money to him then. I am not even sure that action can be taken against her at all since he is no longer a foster child.

  3. #3
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Fradulent Treatment of a UTMA Account in Bankruptcy

    This is a mess and she is doing this because she is mean and trying to get back at me for divorcing her but it isn't fair to my son who is ready for a car and wants to purchase it with his account money as I cannot afford to buy one for him.

    I'm not understanding her actions at all though since there is no debt involved with the UTMA account. If she is the custodian, then she controls the fund but it is not her money. As you state, there is no debt owed to you so realistically I do not believe her inclusion will actually affect the UTMA itself.

    and realize, custodian refers to the controller of the UTMA account and not necessarily to the custodial parent of the child. Then can be one and the same but they do not have to be.

    the only issue I can see here is your son could sue his mother for the money although I do not believe that would be possible until he turns 18 and then only if she refuses to transfer the funds to your child. Otherwise as the custodian she has control of the money and in fact, a legal responsibility to maintain the fund as the law requires. She has a fiduciary responsibility to your son and can be held legally responsible for improper treatment of the funds. I do not believe she is required to use the funds as the child or you desire. It is up the discretion of the custodian as long as it is within the operating rules of the UTMA.

    The one thing that may make a difference is this:

    Under the UTMA rules any assets deposited into a UTMA account are not revocable and any money taken by the custodian must be used for the child's benefit (which did not happen) and is in breach of her fiduciary duty.
    are you suggesting she has illegally used the funds for her own purposes? If so, I believe it would allow the child to sue his mother now but not certain.

  4. #4
    Join Date
    Dec 2014
    Posts
    5

    Default Re: Fradulent Treatment of a UTMA Account in Bankruptcy

    Quote Quoting jk
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    are you suggesting she has illegally used the funds for her own purposes? If so, I believe it would allow the child to sue his mother now but not certain.
    I know she didn't use the funds for my son which violate the UTMA rules governing the account or she is actually hiding the money in New Mexico like she said in a text but claiming the debt in her bankruptcy as if she owes it to me so she can steal the money with impunity.

    I am mostly concerned about her listing me as a creditor of that money... how in the world could she do that with her name on the paperwork listing her as the custodian... why would they allow that to be in her bankruptcy and how can I let someone know so it can be taken out as fraudulent?

  5. #5
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Fradulent Treatment of a UTMA Account in Bankruptcy

    There is no debt owed to you regarding the utma. No debt, no discharge


    and you can write anything you want on the filing. It doesn't mean it is meaningful.

    From what you have stated you have no real idea if she has the money or not. Given the amount is quite minimal it isn't going to be worth expending much effort to deal with this now. When your son turns 18 he can demand an accounting of his money and sue his mother for anything owed him if she fails to turn it over to him.

  6. #6
    Join Date
    Dec 2014
    Posts
    5

    Default Re: Fradulent Treatment of a UTMA Account in Bankruptcy

    Quote Quoting jk
    View Post
    There is no debt owed to you regarding the utma. No debt, no discharge
    But they don't know the debt is not to me so why would'nt they discharge it?

  7. #7
    Join Date
    Jan 2006
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    38,867

    Default Re: Fradulent Treatment of a UTMA Account in Bankruptcy

    Quote Quoting drainpan
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    But they don't know the debt is not to me so why would'nt they discharge it?
    in the end, what difference would it make? If the debt is discharged, it would be of some debt she states is owed to you. So, what does that have to do with the UTMA account? Nothing since you actually have nothing to do with the UTMA account.

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