Transfers & Gifts to Minors
Many different laws and legal devices are in place to help facilitate transfers of property to a minor (i.e., those under 18 years of age).
When a transferor — who usually is a family member — wants to transfer and give property to a minor, there are a number of different things that can be done. A custodianship may be created by a transferor making a gift of property to the minor or by persons indebted to the minor using as custodian as an intermediary to receive payment on the minor’s behalf. To ensure that the custodian does not act in bad faith and squanders the property before the minor takes it free and clear, it is often the case that the custodian posts a bond and/or is subject to court supervision.
Any type of property may be transferred to the custodian, including joint tenancies, securities, and any present or future interest in property.
Aside from custodianships, undoubtedly the most common type of conveyance to a minor is via a revocable living trust. The trustee holds and manages the property for the minor beneficiary. It is also the case that there is some sort of trigger that, once it occurs, the trustee will discharge the trust estate and give the beneficiary all of the assets to which he/she is entitled to.
Because of the varying considerations that are in play with gifts to minors, it is important to give careful consideration as to how you want to effectuate such transfers and, if you choose a custodianship or trust, who will serve as custodian/trustee.