Compliance Journal September 2022
Special Focus Questions and Answers Regarding Minors and WUTMA Accounts: Part 1 WBA Legal frequently receives questions regarding contracting with minors. As a starting point, banks should understand that they may contract with minors. This includes both deposit accounts and loans. However, a minor can escape liability under the contract. Meaning, a minor could avoid liability from a bank seeking to hold a minor accountable for terms under the contract. Thus, banks are free to contract with minors, but must decide so as a matter of risk. When it comes to minor accounts, WBA Legal generally recommends that banks consider the use of an account established under WUTMA as the Act provides rules under which a custodian is required to act and rights for the minor, such as when custodianship under WUTMA ends. This article, which is the first part of a two-part series, will answer the most frequently asked questions WBA Legal receives regarding WUTMA accounts. As such, the following Q&As will focus exclusively on deposit account relationships. Part two of this article series will address the topic of contracting with minors more globally, including the doctrine of incapacity and what banks should consider if lending to minors. The second article will run in next month’s WBA Compliance Journal. Question: What is WUTMA? Answer: WUTMA stands for “Wisconsin Uniform Transfer to Minors Act” and can be found under Wisconsin Chapter 54 which can be accessed here: https://docs.legis.wisconsin.gov/statutes/statutes/54.pdf A WUTMA account would be one which is created pursuant to Chapter 54. WUTMA relates to certain irrevocable transfers of property to a minor, which is held by a custodian. Chapter 54 provides certain requirements, procedures, and responsibilities, which must be followed by the custodian. When an account is opened under WUTMA, bank should refer to its contract, as well as Chapter 54, to understand which rules apply to the relationship between the minor, the adult custodian, and the bank. Question: What is the definition of “minor?” Answer: For purposes of WUTMA, “minor” means an individual who has not attained the age of 21 years. Question: What is the definition of “custodian?” Answer: For purposes of WUTMA, a custodian is a person designated under Wis. Stat. section 54.870 or a successor or substitute custodian. Generally speaking, a custodian is appointed when a transfer to a minor is made. This can be as simple as opening a WUTMA account and designating a custodian.