Minnesota Designation of Successor Custodian by Donor Pursuant to the Uniform Transfers to Minors Act
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Form used to designate a successor custodian for either an UGMA or UTMA account in the event that the original custodian resigns, dies, is incapacitated or is removed as custodian.
The Uniform Gifts to Minors Act provides a way to transfer financial assets to a minor without the time-consuming and expensive establishment of a formal trust. A UGMA account is managed by an adult custodian until the minor beneficiary comes of age, at which point they assume control of the account.
TO WHOSE ESTATE DOES THE CUSTODIAL ACCOUNT BELONG? Custodial accounts are part of the minor's estate in the event of the minor's or custodian's death prior to the minor attaining distribution age unless you, as the donor who established the custodial account, are also the custodian.
Because money placed in an UGMA/UTMA account is owned by the child, earnings are generally taxed at the child's?usually lower?tax rate, rather than the parent's rate. For some families, this savings can be significant. Up to $1,050 in earnings tax-free. The next $1,050 is taxable at the child's tax rate.
The UTMA allows the donor to name a custodian, who has the fiduciary duty to manage and invest the property on behalf of the minor until that minor becomes of legal age. The property belongs to the minor from the time the property is gifted.
The Uniform Gift to Minors Act (UGMA) was created to provide a means by which title to property could be passed to minors by use of a custodian. The nature of property which could be transferred under the UGMA was limited to securities, cash or other personal property.
In Minnesota, the age limit is 21, which means that the custodian of an UTMA account established in Minnesota must transfer the custodial property to the minor when they reach age 21. At that time, they have full financial control of their inherited assets.
Only one custodian and minor are allowed per custodial account. If you want to open a custodial account for a child, all you need is their social security number (SSN), as all of the taxes are reported under the minor's SSN. Reporting taxes under the minor's SSN is a big benefit.
