This memorandum is in response to your request for our opinion as to whether or not
a minor is permitted to own property in the State of Texas. You have requested that
we determine whether or not the proposed purchase of real estate by the representative
payee qualifies as a prudent investment under the prudent man rule. Further, if this
is considered to be a prudent investment, you have requested that we determine whether
or not Texas State law permits the property to be titled showing the child as owner.
For the reasons discussed below, we believe that there are no statutory restrictions
on the ownership of property by minors in the State of Texas, and that the purchase
of real estate by the representative payee qualifies as a prudent investment under
the prudent man rule.
A child Social Security beneficiary (C1) received a retroactive payment of over $100,000.
The child's mother is the representative payee and is a realtor. The mother, as representative
payee, wishes to use $84,000 from the retroactive payment to invest in a house for
the purpose of renovating and selling it.
In our opinion, a minor is capable of holding title to property in Texas. Although
no statute specifically addresses the abilities of those younger than eighteen to
own property, there appears to be no restrictions under Texas law on the ability of
minors under the age of eighteen to own property. Moreover, case law in Texas implies
that a minor has the ability to own or acquire property without such restrictions
because there are cases involving a minor's ownership interest in property which do
not question the right of the minor to own the property. See Johnson v. Morton, 67 S.W. 790 (Tex. Civ. App. 1902) (minors granted property in a deed); Milner v. McDaniel, 36 S.W. 2d 992, 993 (Tex. 1931) (minor can take title to the homestead property
unburdened by the claims of creditors of the decedent's estate except those specified
by the Texas Constitution and Statute); Snyder v. Allstate Insurance Co., 485 S.W. 2d. 769 (Tex. 1972) (title of car in the name of the minor and the minor
considered owner of car). There appears to be no restriction as to the age of the
minor or the types of property that can be held by a minor; therefore, it is our opinion
a minor can own property in Texas.
In addressing whether or not the purchase of real estate would be a prudent investment,
Texas has no special provisions for investments by parent payees of minor children.
Therefore, we look to the rules applying to the investments of trust estates by trustees.
Generally, there are no specific types of investments that are considered appropriate
or inappropriate under Texas Law. Rather, trustees are permitted to acquire any type
of investments or property that persons of ordinary prudence, discretion, or intelligence
acquire or retain for their own account. See Tex. Prop. Code Ann. § 113.056 (Vernon 1995). In addition, a trustee may manage the
trust property and invest and reinvest in property of any character on the conditions
and for the lengths of time, as the trustee considers proper, notwithstanding that
the time may extend beyond the term of the trust. Id. at § 113.006. Absent limiting provisions in the instrument creating the trust, the
trustee of an express trust is given authority to exchange and invest property of
the trust. Humane Soc. of Austin and Travis County v. Austin National Bank, 831 S.W.29 574 (sup. 1975) cert. denied, 425 U.S. 976 (1976).
However, these provisions do not confer unlimited power on the trustee. Texas law
requires that the trustee "exercise judgment and care under circumstances then prevailing
that persons of ordinary prudence, discretion, and intelligence exercise in the management
of their own affairs, not in regard to speculation but in regard to the permanent
disposition of their funds." Tex. Prop. Code Ann. § 113.056(a). They are to consider
the probable income from as well as the probable increase in value and the safety
of their capital. Id. Determinations of whether trustees have exercised prudence are made taking into consideration
all of the assets of the trust over which the trustee had management and control,
rather than a single investment. Id. Within these limits, a trustee "may acquire and retain every kind of property and
every kind of investment that persons of ordinary prudence, discretion, and intelligence
acquire or retain for their own account." Id. at § 113.056(b).
In summary, we have found no law in the state of Texas that would prohibit a minor
from acquiring real or personal property in his or her own name. Additionally, Texas
law does not prohibit a representative payee from investing in real estate, and considering
the representative payee's experience as a realtor, we believe that this investment
would be prudent under the laws of the state of Texas.
Tina M. W~
Regional Chief Counsel
Cicely S. J~
Assistant Regional Counsel