Report in support of proposed amendments to New York’s Uniform Transfers to Minors Act

SUMMARY

The Trusts, Estates & Surrogate’s Courts Committee (John Olivieri, Chair) supports a proposal by the New York State Bar Association to amend Estates, Powers and Trust Law Sections §7-6.1 and 7-6.20 pertaining to the Uniform Transfers to Minors Act (“UTMA”). The UTMA provides a mechanism under which gifts can be made to a minor without the drawbacks sometimes associated with a guardianship arrangement or trust, such as legal fees, court supervision, or tax complexities. New York’s UTMA statute requires that the property being held for the minor’s benefit pass to the minor at age twenty-one. In cases where it has become clear that the beneficiary lacks the maturity necessary to properly handle the funds at age twenty-one or where circumstances have otherwise changed since the date of funding, it may be desirable and in the best interests of the beneficiary to delay the minor’s access to UTMA account funds. In response to this concern, a number of states have amended their UTMA statutes to explicitly allow a custodian to use custodial assets to fund a trust that satisfies the requirements of §2503(c) of the Internal Revenue Code for the benefit of the minor. The proposed amendments supported by the Committee would mirror amendments made to UTMA statutes in other states.