Securities – Inter Vivos Gifts to Minors

A statute recently enacted in twelve states and expected to be considered by seven other states this year, authorizes a new method for making gifts of securities to minors and for administering such gifts. The statute provides: (1) that irrevocable gifts of securities may be made to minors by use of statutory registration or deed of gift forms; (2) for the creation of a new type of fiduciary termed a custodian; (3) that the custodian shall have powers and duties over the minor’s securities including authority to manage, sell, reinvest the proceeds from the sale and administer the securities for the child’s benefit until he reaches twenty-one; (4) for an exoneration clause intended to afford protection from liability for any transfer agent or other person dealing with the custodian; (5) that no accounting is required of the custodian unless demanded within one year after the child reaches twenty-one; and (6) that the procedure set up by the statute is not to be the exclusive means of making gifts of securities to minors.