SF 2914 makes changes to the Uniform Transfers to Minors Act (UTMA), which governs custodial accounts for transfers of property to minors.

Section 1. Care of custodial property. Under current law custodians are required to exercise a “prudent person” standard of care when dealing with the minor’s property. This section replaces the “prudent person” standard with the “prudent investor rule” governing trustees in chapter 501C.

Sec. 2. Powers of custodian. Authorizes a custodian to transfer, with or without a court order, all or part of the custodial property to a trust that satisfies the requirements of a minor’s trust described in the Internal Revenue Code.  A transfer to a trust terminates the custodianship.

Sec. 3. Transfer upon termination of custodianship.

Subdivision 1. Terminating events. Changes the termination age of all UTMA accounts to 21 (under current law some accounts terminate at 18).

Subd. 2. Transfer. When a terminating event occurs (minor turns 21 or passes away), if there is no custodian serving or the custodian fails to transfer the custodial property to the minor or minor’s estate within 90 days, the minor or minor’s estate may execute an affidavit and supporting documentation and submit it to the person in possession of the custodial property as conclusive proof that the terminating event occurred. A person who transfers the custodial property to the minor or minor’s estate upon receipt of the affidavit and supporting documentation is not liable for the transfer.

Sec. 4. Effect on existing custodianships. Deletes obsolete language related to the effect of the UTMA on custodial accounts which existed in 1985 (when this law was last updated). The age-related changes in section 3 do not apply to existing custodial property transferred before the effective date.

Effective date. This section is effective the day following final enactment.