Gifts to Minors Act

Gifts to Minors Act

The Gifts to Minors Act has been enacted in every state (with only minor variations) that facilitates the management of money given to Infants.

Initially, in 1955 and 1956, thirteen states enacted a law called an Act Concerning Gifts of Securities to Minors. The New York Stock Exchange and the Association of Stock Exchange Firms sponsored the development of the law, to make it possible to donate shares of stock to children without the creation of a formal trust. The scope of the law was subsequently expanded to encompass all gifts to minors.

The law allows the individual giving the property to choose an adult in whom he or she has confidence to serve as custodian of the property for the infant. The custodian has authority to collect, hold, manage, invest, and reinvest the property.

The custodian may pay out some of the money for the child's support, if necessary, and must manage the funds reasonably. The custodian must maintain accurate records of transactions and pay over the property when the child reaches majority. A custodian is not permitted to use any of the money personally or for anyone else except the child, nor can the person commingle the property with his or her own.

A professional custodian, such as a trust company or an attorney serving as guardian of the property for the minor, can be remunerated out of the child's property. Such a custodian is, however, held to a higher standard of care in management of the property. Other business people who deal with the custodian in management of the property are not responsible for ascertaining that the custodian has authority to act.

When a custodian resigns, dies, or is removed from the position by court order, another custodian can be appointed as a successor. Before dying, a custodian can designate who his or her successor will be, or a court may appoint one. A petition to appoint a new custodian can be filed in court by the individual who initially made the gift, by an adult member of the child's family, by a guardian, or generally by the child if the child is over fourteen years of age.

The age of majority varies from one state to another. Within some states, the age of majority is not the same for all purposes, so it is necessary to check the Gifts to Minors Act in the state in which the child resides.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Every state has either a Uniform Gifts to Minors Act or a Uniform Transfers to Minors Act.
Traditionally, the common way to save for children and other descendants was to make annual gifts to Uniform Gifts to Minors Act accounts (UGMA), which involved no lawyer, no trust, and no complications.
Taxpayers with young dependent children who are starting to plan how to pay for college should not overlook the use of the Uniform Transfers to Minors Act (or Uniform Gifts to Minors Act) for some portion of their savings for college plans.
Parents who wish to shift investment income to their children can establish custodian accounts under the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act. Interest, dividends, and capital gains may then be reported by their children, who will owe less tax.
Most state laws provide a way to establish a custodial account under either UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act).
Note: Under the official texts of the original (1956) and revised (1966) versions of the Uniform Gifts to Minors Act, gifts of securities and money can be made.
Many grandparents are familiar with UTMAs, (Uniform Transfer to Minors Accounts) or UGMAs (Uniform Gifts to Minors Act); they make contributions to them for the benefit of a grandchild.
(3) A gift of life insurance under a Uniform Gifts to Minors Act or a Uniform Transfers to Minors Act generally qualifies for the gift tax annual exclusion (but see Q 918).
Initially the contract will typically be owned by a parent, grandparent, trust, or obtained as a custodial gift under the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act (see discussions on pages 477 and 562).
The Uniform Gifts to Minors Act (UGMA), The Uniform Transfers to Minors Act (UTMA) Accounts, and Coverdell Education Savings Accounts (formerly known as Education IRAs) are just some of the traditional ways to fund college.
The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) provide a way for gifts to be made to children in custodianship.
* Generally, gifts of life insurance to minors in states that have adopted the UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act) will qualify for the gift tax annual exclusion.