Uniform Transfers To Minors Act
In an effort to keep our clients and friends apprised of recent legal developments which may effect them in their personal, financial and legal planning, we periodically notify them by a letter or memorandum summarizing areas that we think will be of interest. In this brief memo we focus on:
UNIFORM TRANSFERS TO MINORS ACT ADOPTED IN MICHIGAN
The Michigan Uniform Gifts to Minors Act ("UGMA") was repealed as of December 30, 1998, and replaced by the Michigan Uniform Transfers to Minors Act ("UTMA").
One important difference between UTMA and the former UGMA is that transfer of the custodial property to the minor may be delayed by using appropriate language at the time of transfer that allows the custodianship to last until the minor's 21st birthday instead of the minor's 18th birthday.
Another significant difference between UTMA and the former UGMA is that the types of property that may be transferred is not limited. Under UGMA, gifts were limited to securities, money, insurance, and annuities.
UTMA applies to a transfer made before December 30, 1998, under UGMA. However, it will not extend the duration of custodianships in existence on the effective date of UTMA that were created under UGMA.
Caution -- While custodial property under UTMA is not includible in the parent's estate under IRC §2041 (powers of appointment), it may be included under IRC §2038 (revocable transfers) if the parent is the donor and appoints himself custodian.
Please call if you would like further information about UTMA. Also, if you know anyone else who would like a copy of this Memorandum, please let us know.
This Memorandum is intended to provide general information concerning legal developments. It is not intended to be and should not be regarded as a legal opinion or legal advice on which you should rely without seeking legal counsel.