Effective Dates: 10/26/2022 - Present Previous | Next

SI CHI01120.205 Uniform Gifts/Transfers To Minors Act

A. General

All states in Region V have enacted a version of the Uniformed Transfers to Minors Act (UTMA). These acts allow property to be transferred to either an adult or trust company, who then holds the property as custodian for the minor. When a custodian holds property on behalf of a minor pursuant to the UTMA, the custodian must transfer the property to the minor when the minor reaches a certain age (the age of majority). The age of majority depends upon state law and, in some cases, how the transfer was made.

B. Guidelines for Determining Which State's Law Controls the Age of Majority

Where a custodianship is validly created according to the UTMA of a particular state, that state's law controls the age of majority.

To be validly created, the transfer document must invoke the law of a particular state, and there must be a connection with the chosen state at the time of the transfer. The connection is satisfied if, at the time of the transfer, the transferor, the minor or the custodian is a resident of the chosen state, or the custodial property is located in the chosen state.

When a transfer is made in accordance with a state's version of the UTMA, UGMA or a similar statute, that state's law controls the age of majority. In most cases, written documentation of the transfer will identify the applicable state law. In all Region V states, the document creating a custodianship must invoke the law of the state by using (in substance) words referring to the state's UTMA (e.g., "as custodian for _________ (name of minor) under the (name of state) uniform transfers to minors act."). When the transfer document does not refer to a specific state's law, the transfer may or may not be valid, and those cases should be referred to the SSI Team for referral to the Office of the General Counsel for a legal opinion.

C. State Law- Region V

The following chart shows the age of majority for each state in Region V. The law in effect on the date of the transfer controls the age of majority.

1. Illinois

For transfers made before July 1, 1986:

The age of majority is 18 if no custodianship is expressly authorized. The age of majority is 21 if the instrument expressly authorized the creation of a custodianship.

For transfers made on or after July 1, 1986:

The age of majority is 18 if the custodianship is created pursuant to a transfer by a fiduciary (that is not expressly authorized) or by an obligor. The age of majority is 21 if the custodianship is created by gift; by the exercise of a power of appointment (see D.1 below for an example); or pursuant to a will or trust that expressly authorized the transfer.

2. Indiana

For transfers made before September 1, 1984:

The age of majority is 18.

For transfers made on or after September 1, 1984 and before July 1, 1989:

The person making the gift can specify the age of majority to be any age between 18 and 21. If no specific age is designated in the instrument making the gift, the age of majority is 18.

For transfers made on or after July 1, 1989:

The age of majority is 21.

3. Michigan

For transfers made before December 30, 1998:

The age of majority is 18.

For transfers made on or after December 30, 1998:

The donor or transferor can specify the age of majority to be any age between 18 and 21, if the custodianship is created by gift; by the exercise of a power of appointment; or pursuant to a will or trust that expressly authorized the transfer. If no specific age is designated, the age of majority is 18. The age of majority is also 18 if the custodianship is created pursuant to a will or trust that does not expressly authorize the transfer, or by a person holding the property of or owing a liquidated debt to a minor.

4. Minnesota

For transfers made before January 1, 1986:

The age of majority is 18.

For transfers made on or after January 1, 1986:

The age of majority is 18 if the custodianship is created pursuant to a transfer by a fiduciary (that is not expressly authorized) or by an obligor. The age of majority is 21 if the custodianship is created by gift; by the exercise of a power of appointment (see D.1 below for an example); or pursuant to a will or trust that expressly authorized the transfer.

5. Ohio

For transfers made before May 7, 1986:

The age of majority is 18.

For transfers made on or after May 7, 1986:

The person making the transfer can specify the age of majority to be any age between 18 and 21. If no specific age is designated in the instrument making the transfer, the age of majority is 21.

6. Wisconsin

For transfers made before April 8, 1988:

The age of majority is 18.

For transfers made on or after April 8, 1988:

The age of majority is 18 if the custodianship is created pursuant to a transfer by a fiduciary (that is not expressly authorized) or by an obligor. The age of majority is 21 if the custodianship is created by gift; by the exercise of a power of appointment (see D.1 below for an example); or pursuant to a will or trust that expressly authorized the transfer.

D. Examples of Types of Transfers

In Illinois, Minnesota, and Wisconsin, the age at which a minor can assume control of UTMA property will depend upon how the custodianship was created. In particular, the age of majority in those states is 21 when the custodianship is created by gift, "exercise of a power of appointment," or transfer authorized by will or trust. The age of majority is 18 when the custodianship is created by "other transfers by fiduciaries or "transfers by obligors." Following are examples to help illustrate this policy:

1. Power of Appointment

In general, a "power of appointment" is the authority to designate the recipient of an interest in property. The power is conferred by a donor (the property owner) onto a donee (the person who holds the power); the donee then has the power to select and nominate one or more recipients of the donor's property at some future time. The donee does not own the property but has the power to distribute the property.

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    The grantor of a trust, reserves to themselves (or grants to another individual) a power of appointment to be exercised by will at a later time. The individual with the power of appointment (the donee) then has the power to designate by will the individuals who will receive the trust property when the trust terminates. The donee's will directs that the trust property be transferred to a custodian on behalf of a minor. This differs from other distributions directed by a will, because the donee does not own the property in question.

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    A testator's will grants their surviving spouse power of appointment over a certain piece of property. The surviving spouse deeds the property to a custodian on behalf of a minor.

2. Other Transfers by Fiduciaries

"Other transfers by fiduciaries" include those not directly made by gift, exercise of power of appointment, or specific authority of a will or trust. A "fiduciary" is an individual who must act for the benefit of another, and must exercise good faith and a high standard of care on the other's behalf (usually with respect to managing money). For example, a trustee is a fiduciary for the beneficiary of a trust; a guardian is a fiduciary for their ward; and an agent is a fiduciary for their principal. The following are examples of custodianships created by "other transfers by fiduciaries":

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    A trustee transfers trust property to a custodian on behalf of a minor, when the trust instrument does not provide specific authority to transfer property to the minor (but does not prohibit such a transfer), but the trustee has broad discretion to manage the trust and distribute trust property.

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    An individual dies intestate (without a will), and a minor is a beneficiary of the estate in accordance with the state's intestate succession laws. A representative of the decedent's estate transfers property to a custodian on behalf of a minor.

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    The representative of a decedent's estate transfers property to a custodian on behalf of a minor, where the decedent's will does not expressly authorize (but does not prohibit) the transfer (e.g., the will directs that the estate residual be distributed to heirs at law).

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    The guardian of a minor transfers the minor's own property to a custodian on behalf of a minor

3. Transfers by Obligors

An "obligor" is an individual bound by legal obligation (e.g., a debt). The following are examples of transfers by obligors:

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    A bank holding a joint or "payable on death" account for which a minor is the surviving payee transfers the account proceeds to a custodian on behalf of the minor.

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    A person owing a debt to a minor (e.g., a tort judgment) transfers property to a custodian on behalf of the minor.

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    An insurance company holding a life insurance policy for which a minor is the beneficiary pays the policy proceeds to a custodian on behalf of the minor.

These examples are not all-inclusive and are intended to provide guidance for distinguishing between various transfers and determining the age at which a minor will assume control of transferred property. In some cases, it might be necessary to obtain a trust agreement or will to determine whether a transfer was specifically authorized. Should you have difficulty determining the nature of a particular transfer, please refer the case to the SSI Team for review.

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SI CHI01120.205 - Uniform Gifts/Transfers To Minors Act - 10/26/2022
Batch run: 10/26/2022
Rev:10/26/2022