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.