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Home » Estate Planning » Understanding the Uniform Transfers to Minors Act

Understanding the Uniform Transfers to Minors Act

February 14, 2018Estate Planning

Los Angeles estate planning lawyers A common misconception that clients often have is that a child can directly inherit property. Until an individual reaches the age of majority, which in California is 18, that person cannot inherit property in their own name. Instead, an adult must be appointed as the custodian of the property and manage it until the child reaches the age of majority and can be responsible for the property themselves. Our Los Angeles estate planning lawyers can answer your questions about estate planning for minors.

How can my minor child inherit property?

There are several different ways that a minor child can inherit property. A child can be named as a beneficiary in a will or trust or they can receive a gift from the estate of a loved one, after that person’s death. Also, a child can be named the beneficiary of a retirement account or life insurance policy. Our Los Angeles estate planning lawyers can discuss your options with you.

If a child inherits through a trust, the trustee will be responsible for supervising the child’s inheritance but must comply with the terms of the trust. The only other method is for the inherited property to be placed in a custodial account until the child becomes an adult. This is done pursuant to the Uniform Transfers to Minors Act. In those cases, the court appoints a guardian over the inherited property who will manage the property until the child becomes an adult.

Naming a child as a trust beneficiary

When a child is named as a trust beneficiary, the trustee will have some specific responsibilities. First, the trustee is must obtain a tax identification number for the trust in order to open a bank account or brokerage account. The account must be opened in the name of the trust, for the benefit of the child. Once that has been accomplished, the trust assets will be distributed to the child, by the trustee, in the manner provided by the trust agreement.

Typical trust terms relating to a child beneficiary

There are many different situations that can arise when a child receives an inheritance through a trust. For example, a trust could include terms that the trust assets will be distributed to the child once she reaches the age of 24. Until that condition is met, the trustee can be given the power to use the trust funds for the child’s “health, education, maintenance, and support.”  This is a standard provision including these types of trusts. When the child reaches the established age and the trust ends, the child can then receive and manage their own inheritance.

California’s Uniform Transfers to Minors Act provisions

Every state establishes their own provisions with regard to the Uniform Transfers to Minors Act, including the time limit for a UTMA account which is established through a will or trust. In California, a UTMA account must end before the minor reaches age 18 to 25.

Gifts to minors require a guardianship for the property

When property from an estate is left to a minor and neither a custodial account nor a trust has been created to take control of that property, then the probate court will need to appoint a guardian to manage the property until the child turns 18, the age of majority. The same is true for assets other than cash. For example, if a minor child is named as the beneficiary of a life insurance policy, that child will not be able to inherit the life insurance proceeds until a guardian has been appointed to manage the insurance proceeds until the child reaches the age of majority. The same is true when a parent dies without a will and a minor child inherits the parent’s estate.  If there are siblings, the court must appoint a separate guardian for the property belonging to each child who can manage the property for that child until he or she reaches the age of majority.

Being appointed as a guardian over property

A guardian over property is much like a custodian or trustee.  They are responsible for properly managing the inheritance for the benefit of the minor. However, unlike a custodian or trustee, the guardianship ends when the child reaches the age of majority because the court no longer has jurisdiction. Also, a guardian over property must file a formal report with the probate court that accounts for exactly how assets have been invested and distributed. On the other hand, custodians and trustees may not have these same requirements.

Join us for a free seminar today! If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.

#estateplanning, #schomerlawgroup, #uniformtransferstominorsact

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Scott Schomer, Estate Planning Attorney
Scott Schomer, Estate Planning Attorney
A graduate of Boston University School of Law, Scott P. Schomer is a frequent lecturer on estate planning and elder law issues, having discussed these important issues on local and national television. A seasoned courtroom advocate, Scott has obtained combined judgments and verdicts in excess of twenty-five million dollars for his clients. Scott has served as a member of the Los Angeles Superior Court Probate Volunteer Panel (PVP Attorney), Probate Settlement Panel and a Judge Pro Tempore. Scott's expertise has been recognized by his peers with such accolades as a life-time membership in the Multi-Million Dollar Advocates Forum, the Five Star Wealth Manager designation, and repeated nominations as California Super Lawyer.
Scott Schomer, Estate Planning Attorney
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