Uniform Transfers to Minors Act

Beaune city center, France

Uniform Transfers to Minors Act is designed to allow for the transfer of money to a minor without the need for attorney drafted special trust.   Often used by grandparents as a tax planning device, the IRS allows for annual gifting, of up to $13,000,  to any other person without  tax consequences.  However, when a minor is the recipient of annual gifting, or any type of asset, the donor must appoint a trustee or custodian to manage the funds.

Adopted by most states, including Illinois (760 ILCS 20/4) the Uniform Transfers to Minors Act allows an adult to contribute to a custodial account in a minor’s name without having to name a legal guardian or establish a trust.  Minors can have money invested in their name, and can purchase securities, as long as the custodian manages the funds. The custodian has a fiduciary responsibility to manage the funds prudently, and upon the attainment of his or her majority (age 18), the minor has an absolute right to the funds.

The statute in Illinois (760 ILCS 20/10) guidance is given as to the proper forms and designations when creating the custodial property  and effecting the transfer of funds, and designation of the initial custodian and control.  A sample form for an appropriate document effecting the transfer is as follows:

I, _________________, hereby transfer to ________________,
as custodian for ____________,under the Illinois Uniform 
Transfers to Minors Act the following:
                 (insert description of the custodial property which
is sufficient for identification purposes)
Dated:  ________        _________________________ (signature of transferor)
______________________ (name of the custodian) acknowledges
 receipt of the property described above as custodian for the minor
 named above under the Illinois Uniform Transfers to Minors Act.
Dated:  ________        _________________________ (signature of custodian)

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