Most people know that they can set up a minor’s account under the California Uniform Transfers to Minors act (CUTMA). This kind of account will allow an adult (called a Custodian) to handle the money while the child is under the age of eighteen. The person who sets up the account can say that the child is not entitled to demand the funds until any age between eighteen and twenty-one. This is the limit established under CUTMA for gifts during the life of the donor.
The Most Important Thing to Understand
What people often do not understand is that it is imperative that any will or trust have a savings provision that provides for a Custodian to hold money for a child who is not yet the age of eighteen. These gifts that happen at the death of the donor can be held up to any age between eighteen and twenty-five. When the child reaches the stated age he or she can demand payment in full.
For either kind of gift (either during life or after the death of the donor) the Custodian can make payments of the income and principal for the benefit of the donee (the child) during the time that the child is not able to demand payment of the entire amount.
This blog contains general information and is not meant to apply to a specific situation. Please seek advice of counsel before proceeding as each case is unique.