A Financial Institution’s Guide to Wisconsin’s Uniform Transfers to Minors Act

Notice 2017-4

The Wisconsin Uniform Transfers to Minors Act is set forth in chapter 54 of the Wisconsin Statutes. Specifically, Wis. Stats. § 54.854 – 54.898. Collectively, these provisions govern Wisconsin’s Uniform Transfers to Minors Act accounts (WUTMA accounts). WUTMA accounts enable financial institutions to open accounts, with a custodian, to hold funds gifted or otherwise transferred to a minor, for the benefit of a minor.

Creating a WUTMA Account

Wis. Stat. § 54.870 outlines the manner of creating custodial property and effecting transfer, the designation of an initial custodian, and control of a WUTMA account. An instrument in the following form creates and transfers custodial property: 

I, …. (name of transferor or name and representative capacity if a fiduciary) hereby transfer to …. (name of custodian), as custodian for …. (name of minor) under the Wisconsin Uniform Transfers to Minors Act, the following: …. (insert a description of the custodial property sufficient to identify it).

Dated: ….



…. (name of custodian) acknowledges receipt of the property described above, as custodian for the minor named above under the Wisconsin Uniform Transfers to Minors Act.

Dated: ….


(Signature of Custodian)

In establishing a WUTMA account a financial institution is contracting with a custodian, who has the right to receive the property for the minor beneficiary. A transferor, as defined in Wis. Stat. § 54.854(14), may revocably nominate a custodian to receive the property for a minor by naming the custodian, followed in substance by the words: “as custodian for …. (name of minor) under the Wisconsin Uniform Transfers to Minors Act.” The nomination may name one or more persons as substitute custodians to whom the property must be transferred, in the order named, if the first nominated custodian dies before the transfer or is unable, declines or is ineligible to serve. The nomination may be made in a will, a trust, a deed, an instrument exercising a power of appointment or a writing designating a beneficiary of contractual rights which is registered with or delivered to the payor, issuer or other obligor of the contractual rights. Wis. Stat. § 54.858(1).

The nomination of a custodian under this section does not create custodial property until the nominating instrument becomes irrevocable or a transfer to the nominated custodian is completed under Wis. Stat. § 54.870. Upon the creation of custodial property or the transfer to the nominated custodian is complete, the custodian has management and control of the WUTMA account.

Protection of Financial Institutions

While the WUTMA statutes outline the various powers and duties of a custodian, financial institutions are protected from liability, when certain criteria are met. Wis. Stat. § 54.884 outlines the exemption of third parties from liability. It provides that a 3rd person, in good faith and without court order, may act on the instructions of or otherwise deal with any person purporting to make a transfer or purporting to act in the capacity of a custodian and, in the absence of knowledge, is not responsible for determining any of the following: (1) The validity of the purported custodian’s designation; (2) The propriety of, or the authority under the Uniform Transfer to Minors Act for, any act of the purported custodian; (3) The validity or propriety under Uniform Transfer to Minors Act of any instrument or instructions executed or given either by the person purporting to make a transfer or by the purported custodian; (4) The propriety of the application of any property of the minor delivered to the purported custodian.

Selected Relevant WUTMA Provisions

Overall, the WUTMA statutes outline the intricacies of WUTMA accounts. Some provisions within chapter 54 have a direct impact on financial institutions and implicitly dictate how financial institutions should handle WUTMA accounts. Below, find examples of how some of these provisions impact financial institutions.

Wis. Stat. § 54.860 states: A person may make a transfer by irrevocable gift to, or the irrevocable exercise of a power of appointment in favor of, a custodian for the benefit of a minor under Wis. Stat. § 54.870. This provision highlights an important characteristic of a WUTMA account that financial institutions must be aware of. That is, the custodian, not the minor, is with whom the financial institution is contracting. While the property technically belongs to the minor, it is in the control of the custodian for the benefit of the minor. So, an institution should carefully consider whether to give information to an inquiring minor. It may be best for a minor to discuss balances with the custodian. If a minor believes funds are being used inappropriately, the minor could petition the court.

The termination of a WUTMA custodianship depends upon the type of gift or transfer made to the custodian for the benefit of the minor. Wis. Stat. §54.892 states that the custodian must transfer, in an appropriate manner, the custodial property to the minor or the minor’s estate upon the earlier of: (1) the minor’s attainment of 21 years of age with respect to property transferred by gift under 54. 860, or under a provision in a will or trust under 54.862; (2) the minor’s attainment of 18 years of age for property transferred by certain other fiduciaries under 54.864 or obligors under 54.866; or (3) upon the minor’s death. While most WUTMA custodianships will terminate upon the minor reaching the age of 21, it is up to the custodian rather than the institution to make this determination.Regardless of his or her age, if the named minor on a WUTMA account asserts that he or she is entitled to access funds on deposit, the named minor should be directed to the custodian to discuss this matter, or to the court if named minor believes that the custodian is acting improperly.

Wis. Stat. § 54.892 states that upon a minor’s death, the custodian shall transfer, in an appropriate manner, the custodial property to the minor’s estate. Such a provision means that Payable on Death beneficiary designations are not allowed on WUTMA accounts.

Questions and Answers

As WUTMA accounts have unique qualities, it is understandable that such accounts may lead to questions about how WUTMA accounts may impact decisions at your financial institution.  Below, please find common questions from financial institutions regarding WUTMA accounts.

Q1: Can a minor deposit their paycheck in a WUTMA account?

A1:  No. A minor’s paycheck should not be deposited in a WUTMA account, as it does not constitute a gift or transfer. Only funds that are gifts or transfers may be deposited to a WUTMA accounts.

Additionally, the WUTMA account is managed and controlled by the custodian. Consequently, the minor will not have access to the deposited funds. Allowing a minor to deposit non-WUTMA funds in to a WUTMA account may lead to unnecessary disputes and complaints.

Q2: If a minor cannot deposit their paychecks in a WUTMA account, what account should my financial institution open?

A2: While an institution is generally free to contract with whomever it wishes, a risk in contracting with a minor alone is that a minor can void most contracts into which they have entered, by raising a defense of incapacity to contract based upon their age. Thus, if an individual account is opened with only the minor, and the minor raises this defense, the bank would not be able to recoup, for example, any fees or charges, etc., assessed to the account. To avoid this situation, an institution should consider requiring a joint account, with joint and several liability, be opened between the minor and a parent, guardian or other individual who has reached the age of majority. If the minor raises the defense, in this type of account, the contract will remain valid with respect to the remaining party, and such party will still be liable for all fees and charges assessed on the account even if such fees and charges are attributable to the minor’s activity on the account. Of course, an institution may also wish to consult with its own legal counsel regarding the risks and benefits of other accounts the institution may offer.

Q3: If a custodian dies but did not appoint a successor custodian, does a parent automatically become the new custodian?

A3: No. As stated in Wis. Stat. § 54.888(4), if a custodian is ineligible, dies or becomes incapacitated without having effectively designated a successor and the minor has attained the age of 14 years, the minor may designate as successor custodian, an adult member of the minor’s family, a conservator of the minor, as defined in Wis. Stat. § 54.01(3), or a trust company. If the minor has not attained the age of 14 years or fails to act within 60 days after the ineligibility, death or incapacity, the conservator of the minor becomes successor custodian. If the minor has no conservator or the conservator declines to act, the transferor, the legal representative of the transferor or the custodian, an adult member of the minor’s family or any other interested person may petition the court to designate a successor custodian.

So, a minor, who has reached the age of 14, may designate a new custodian, within 60 days, by executing and dating an instrument of designation before a subscribing witness other than the successor. If beyond 60 days, the minor’s parent, or other person, as noted above, may petition the court to become the custodian. However, a parent does not automatically become the custodian, nor has the right to transact on a WUTMA account.

If the custodian had designated a successor custodian, at the time the custodian opened the WUTMA account, for instance, this type of issue could have been avoided.

Q4: What if a custodian wants to close out a WUTMA account with my financial institution? Do I write the check to the custodian? Do I write the check to the beneficiary?

A4: As the funds are still subject to the WUTMA provisions, it is best practice to write the check to [name of minor] by [name of adult custodian] under WUTMA. In using this language, another financial institution will know that the funds are subject to WUTMA and can accurately identify the minor beneficiary and the adult custodian.

As a resource to its members, Wisconsin Bankers Association’s legal department provides information related to banking laws and regulations. For specific questions regarding WUTMA accounts, please email wbalegal@wisbank.com or call 608-441-1200.

By, Ally Bates