Q: Over the years, my husband and I put money to cover our daughter's projected college costs into utility stocks through a Uniform Gift to Minors account. We used her Social Security number and I was listed as custodian. Now she has decided not to go to college. Is there any way to transfer these stocks back to our account? We would prefer not to sell them. We would like to make this move in a way that would mean the least tax to us.
A: The goal you want can be accomplished but not without the consent of your daughter.Gifts made under the Uniform Gift to Minors Act are considered irrevocable, so you may not just take back the stock unilaterally. However, your daughter can decide to give the stock back to you, essentially making a gift of the shares.
But, be advised: Once your daughter takes possession of her account, she may do what she wants with it. If she decides to give them back to you, this act would be considered a gift and would be subject, for tax purposes, to the same requirements as other gifts. Under the Internal Revenue Code, one individual may give another individual $10,000 per year tax-free to the recipient. So, your daughter could give you and your husband stock worth a total of $20,000 per year without your having to pay taxes. There is no need to pay taxes on the shares until they are sold.