Minnesota Session Laws - 1985, Regular Session

  

                         Laws of Minnesota 1985 

                        CHAPTER 221-S.F.No. 374 
           An act relating to property transfers; regulating 
          transfers to persons under a certain age; enacting the 
          uniform transfers to minors act; proposing coding for 
          new law in Minnesota Statutes, chapter 527; repealing 
          Minnesota Statutes 1984, sections 527.01 to 527.11.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [527.21] [DEFINITIONS.] 
    For purposes of this chapter: 
    (1) "Adult" means an individual who has attained the age of 
21 years, notwithstanding any law to the contrary.  
    (2) "Benefit plan" means an employer's plan for the benefit 
of an employee or partner.  
    (3) "Broker" means a person lawfully engaged in the 
business of effecting transactions in securities or commodities 
for the person's own account or for the account of others.  
    (4) "Conservator" means a person appointed or qualified by 
a court to act as general, limited, or temporary guardian of a 
minor's property or a person legally authorized to perform 
substantially the same functions.  
    (5) "Court" means a court that exercises probate 
jurisdiction.  
    (6) "Custodial property" means (i) any interest in property 
transferred to a custodian under this chapter and (ii) the 
income from and proceeds of that interest in property.  
    (7) "Custodian" means a person so designated under section 
9 or a successor or substitute custodian designated under 
section 18.  
    (8) "Financial institution" means a bank, trust company, 
savings institution, or credit union, chartered and supervised 
under state or federal law.  
    (9) "Legal representative" means an individual's personal 
representative or conservator.  
    (10) "Member of the minor's family" means the minor's 
parent, stepparent, spouse, grandparent, brother, sister, uncle, 
or aunt, whether of the whole or half blood or by adoption.  
    (11) "Minor" means an individual who has not attained the 
age of 21 years, notwithstanding any law to the contrary.  
    (12) "Person" means an individual, corporation, 
organization, or other legal entity.  
    (13) "Personal representative" means an executor, 
administrator, successor personal representative, or special 
administrator of a decedent's estate or a person legally 
authorized to perform substantially the same functions.  
    (14) "State" includes any state of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, and any 
territory or possession subject to the legislative authority of 
the United States. 
    (15) "Transfer" means a transaction that creates custodial 
property under section 9.  
    (16) "Transferor" means a person who makes a transfer under 
this chapter. 
    (17) "Trust company" means a financial institution, 
corporation, or other legal entity, authorized to exercise 
general trust powers.  
    Sec. 2.  [527.22] [SCOPE AND JURISDICTION.] 
    (a) This chapter applies to a transfer that refers to this 
chapter in the designation under section 9, paragraph (a), by 
which the transfer is made, if at the time of the transfer, the 
transferor, the minor, or the custodian is a resident of this 
state or the custodial property is located in this state.  The 
custodianship so created remains subject to this chapter despite 
a subsequent change in residence of a transferor, the minor, or 
the custodian, or the removal of custodial property from this 
state. 
    (b) A person designated as custodian under this chapter is 
subject to personal jurisdiction in this state with respect to 
any matter relating to the custodianship.  
     (c) A transfer that purports to be made and which is valid 
under the uniform transfers to minors act, the uniform gifts to 
minors act, or a substantially similar act, of another state is 
governed by the law of the designated state and may be executed 
and is enforceable in this state if at the time of the transfer, 
the transferor, the minor, or the custodian is a resident of the 
designated state or the custodial property is located in the 
designated state.  
     Sec. 3.  [527.23] [NOMINATION OF CUSTODIAN.] 
     (a) A person having the right to designate the recipient of 
property transferable upon the occurrence of a future event may 
revocably nominate a custodian to receive the property for a 
minor beneficiary upon the occurrence of the event by naming the 
custodian followed in substance by the words:  "as custodian for 
............ (name of minor) under the Minnesota uniform 
transfers to minors act."  The nomination may name one or more 
persons as substitute custodians to whom the property must be 
transferred, in the order named, if the first nominated 
custodian dies before the transfer or is unable, declines, or is 
ineligible to serve.  The nomination may be made in a will, a 
trust, a deed, an instrument exercising a power of appointment, 
or in a writing designating a beneficiary of contractual rights 
which is registered with or delivered to the payor, issuer, or 
other obligor of the contractual rights.  
     (b) A custodian nominated under this section must be a 
person to whom a transfer of property of that kind may be made 
under section 9, paragraph (a). 
     (c) The nomination of a custodian under this section does 
not create custodial property until the nominating instrument 
becomes irrevocable or a transfer to the nominated custodian is 
completed under section 9.  Unless the nomination of a custodian 
has been revoked, upon the occurrence of the future event the 
custodianship becomes effective and the custodian shall enforce 
a transfer of the custodial property pursuant to section 9.  
     Sec. 4.  [527.24] [TRANSFER BY GIFT OR EXERCISE OF POWER OF 
APPOINTMENT.] 
     A person may make a transfer by irrevocable gift to, or the 
irrevocable exercise of a power of appointment in favor of, a 
custodian for the benefit of a minor pursuant to section 9.  
    Sec. 5.  [527.25] [TRANSFER AUTHORIZED BY WILL OR TRUST.] 
    (a) A personal representative or trustee may make an 
irrevocable transfer pursuant to section 9 to a custodian for 
the benefit of a minor as authorized in the governing will or 
trust.  
    (b) If the testator or settlor has nominated a custodian 
under section 3 to receive the custodial property, the transfer 
must be made to that person.  
    (c) If the testator or settlor has not nominated a 
custodian under section 3, or all persons so nominated as 
custodian die before the transfer or are unable, decline, or are 
ineligible to serve, the personal representative or the trustee, 
as the case may be, shall designate the custodian from among 
those eligible to serve as custodian for property of that kind 
under section 9, paragraph (a). 
     Sec. 6.  [527.26] [OTHER TRANSFER BY FIDUCIARY.] 
     (a) Subject to paragraph (c), a personal representative or 
trustee may make an irrevocable transfer to another adult or 
trust company as custodian for the benefit of a minor pursuant 
to section 9, in the absence of a will or under a will or trust 
that does not contain an authorization to do so.  
     (b) Subject to paragraph (c), a conservator may make an 
irrevocable transfer to another adult or trust company as 
custodian for the benefit of the minor pursuant to section 9.  
    (c) A transfer under paragraph (a) or (b) may be made only 
if (i) the personal representative, trustee, or conservator 
considers the transfer to be in the best interest of the minor, 
(ii) the transfer is not prohibited by or inconsistent with 
provisions of the applicable will, trust agreement, or other 
governing instrument, and (iii) the transfer is authorized by 
the court if it exceeds $10,000 in value.  
    Sec. 7.  [527.27] [TRANSFER BY OBLIGOR.] 
    (a) Subject to paragraphs (b) and (c), a person not subject 
to section 5 or 6 who holds property of or owes a liquidated 
debt to a minor not having a conservator may make an irrevocable 
transfer to a custodian for the benefit of the minor pursuant to 
section 9.  
    (b) If a person having the right to do so under section 3 
has nominated a custodian under that section to receive the 
custodial property, the transfer must be made to that person.  
     (c) If no custodian has been nominated under section 3, or 
all persons so nominated as custodian die before the transfer or 
are unable, decline, or are ineligible to serve, a transfer 
under this section may be made to an adult member of the minor's 
family or to a trust company unless the property exceeds $10,000 
in value.  
     Sec. 8.  [527.28] [RECEIPT FOR CUSTODIAL PROPERTY.] 
     A written acknowledgment of delivery by a custodian 
constitutes a sufficient receipt and discharge for custodial 
property transferred to the custodian pursuant to this chapter.  
     Sec. 9.  [527.29] [MANNER OF CREATING CUSTODIAL PROPERTY 
AND EFFECTING TRANSFER; DESIGNATION OF INITIAL CUSTODIAN; 
CONTROL.] 
     (a) Custodial property is created and a transfer is made 
whenever:  
     (1) an uncertificated security or a certificated security 
in registered form is either: 
     (i) registered in the name of the transferor, an adult 
other than the transferor, or a trust company, followed in 
substance by the words:  "as custodian for ............ (name of 
minor) under the Minnesota uniform transfers to minors act"; or 
    (ii) delivered if in certificated form, or any document 
necessary for the transfer of an uncertificated security is 
delivered, together with any necessary endorsement to an adult 
other than the transferor or to a trust company as custodian, 
accompanied by an instrument in substantially the form set forth 
in paragraph (b);  
    (2) money is paid or delivered to a broker or financial 
institution for credit to an account in the name of the 
transferor, an adult other than the transferor, or a trust 
company, followed in substance by the words:  "as custodian for 
............ (name of minor) under the Minnesota uniform 
transfers to minors act";  
    (3) the ownership of a life or endowment insurance policy 
or annuity contract is either:  
    (i) registered with the issuer in the name of the 
transferor, an adult other than the transferor, or a trust 
company, followed in substance by the words:  "as custodian for 
............ (name of minor) under the Minnesota uniform 
transfers to minors act"; or 
    (ii) assigned in a writing delivered to an adult other than 
the transferor or to a trust company whose name in the 
assignment is followed in substance by the words:  "as custodian 
for ............ (name of minor) under the Minnesota uniform 
transfers to minors act";  
    (4) an irrevocable exercise of a power of appointment or an 
irrevocable present right to future payment under a contract is 
the subject of a written notification delivered to the payor, 
issuer, or other obligor that the right is transferred to the 
transferor, an adult other than the transferor, or a trust 
company, whose name in the notification is followed in substance 
by the words:  "as custodian for ............ (name of minor) 
under the Minnesota uniform transfers to minors act";  
    (5) an interest in real property is recorded in the name of 
the transferor, an adult other than the transferor, or a trust 
company, followed in substance by the words:  "as custodian for 
.............. (name of minor) under the Minnesota uniform 
transfers to minors act";  
    (6) a certificate of title issued by a department or agency 
of a state or of the United States which evidences title to 
tangible personal property is either:  
    (1) issued in the name of the transferor, an adult other 
than the transferor, or a trust company, followed in substance 
by the words:  "as custodian for ............ (name of minor) 
under the Minnesota uniform transfers to minors act"; or 
    (ii) delivered to an adult other than the transferor or to 
a trust company, endorsed to that person followed in substance 
by the words:  "as custodian for ............ (name of minor) 
under the Minnesota uniform transfers to minors act"; or 
    (7) an interest in any property not described in clauses 
(1) to (6) is transferred to an adult other than the transferor 
or to a trust company by a written instrument in substantially 
the form set forth in paragraph (b).  
    (b) An instrument in the following form satisfies the 
requirements of clauses (1)(ii) and (7) of paragraph (a):  
 "TRANSFER UNDER THE MINNESOTA UNIFORM 
 TRANSFERS TO MINORS ACT 
    I, ................. (name of transferor or name and 
representative capacity if a fiduciary) hereby transfer to 
................... (name of custodian), as custodian for 
................. (name of minor) under the Minnesota uniform 
transfers to minors act, the following:  (insert a description 
of the custodial property sufficient to identify it).  
Dated:  ................... 
......................................  
                  (Signature)  
................... (name of custodian) acknowledges receipt of 
the property described above as custodian for the minor named 
above under the Minnesota uniform transfers to minors act.  
Dated:  ...................  
......................................  
             (Signature of Custodian)" 
    (c) A transferor shall place the custodian in control of 
the custodial property as soon as practicable.  
    Sec. 10.  [527.30] [SINGLE CUSTODIANSHIP.] 
    A transfer may be made only for one minor, and only one 
person may be the custodian.  All custodial property held under 
this chapter by the same custodian for the benefit of the same 
minor constitutes a single custodianship.  
    Sec. 11.  [527.31] [VALIDITY AND EFFECT OF TRANSFER.] 
    (a) The validity of a transfer made in a manner prescribed 
in this chapter is not affected by:  
    (1) failure of the transferor to comply with section 9, 
paragraph (c) concerning possession and control;  
    (2) designation of an ineligible custodian, except 
designation of the transferor in the case of property for which 
the transferor is ineligible to serve as custodian under section 
9, paragraph (a); or 
    (3) death or incapacity of a person nominated under section 
3 or designated under section 9 as custodian or the disclaimer 
of the office by that person.  
    (b) A transfer made pursuant to section 9 is irrevocable, 
and the custodial property is indefeasibly vested in the minor, 
but the custodian has all the rights, powers, duties, and 
authority provided in this chapter, and neither the minor nor 
the minor's legal representative has any right, power, duty, or 
authority with respect to the custodial property except as 
provided in this chapter.  
    (c) By making a transfer, the transferor incorporates in 
the disposition all the provisions of this chapter and grants to 
the custodian, and to any third person dealing with a person 
designated as custodian, the respective powers, rights, and 
immunities provided in this chapter.  
    Sec. 12.  [527.32] [CARE OF CUSTODIAL PROPERTY.] 
    (a) A custodian shall:  
    (1) take control of custodial property;  
    (2) register or record title to custodial property if 
appropriate; and 
    (3) collect, hold, manage, invest, and reinvest custodial 
property.  
    (b) In dealing with custodial property, a custodian shall 
observe the standard of care that would be observed by a prudent 
person dealing with property of another and is not limited by 
any other statute restricting investments by fiduciaries.  If a 
custodian has a special skill or expertise or is named custodian 
on the basis of representations of a special skill or expertise, 
the custodian shall use that skill or expertise.  However, a 
custodian, in the custodian's discretion and without liability 
to the minor or the minor's estate, may retain any custodial 
property received from a transferor.  
     (c) A custodian may invest in or pay premiums on life 
insurance or endowment policies on (i) the life of the minor 
only if the minor or the minor's estate is the sole beneficiary, 
or (ii) the life of another person in whom the minor has an 
insurable interest only to the extent that the minor, the 
minor's estate, or the custodian in the capacity of custodian, 
is the irrevocable beneficiary.  
    (d) A custodian at all times shall keep custodial property 
separate and distinct from all other property in a manner 
sufficient to identify it clearly as custodial property of the 
minor.  Custodial property consisting of an undivided interest 
is so identified if the minor's interest is held as a tenant in 
common and is fixed.  Custodial property subject to recordation 
is so identified if it is recorded, and custodial property 
subject to registration is so identified if it is either 
registered, or held in an account designated, in the name of the 
custodian, followed in substance by the words:  "as a custodian 
for ............ (name of minor) under the Minnesota uniform 
transfers to minors act."  
     (e) A custodian shall keep records of all transactions with 
respect to custodial property, including information necessary 
for the preparation of the minor's tax returns, and shall make 
them available for inspection at reasonable intervals by a 
parent or legal representative of the minor or by the minor if 
the minor has attained the age of 14 years.  
     Sec. 13.  [527.33] [POWERS OF CUSTODIAN.] 
     (a) A custodian, acting in a custodial capacity, has all 
the rights, powers, and authority over custodial property that 
unmarried adult owners have over their own property, but a 
custodian may exercise those rights, powers, and authority in 
that capacity only.  
    (b) This section does not relieve a custodian from 
liability for breach of section 12.  
     Sec. 14.  [527.34] [USE OF CUSTODIAL PROPERTY.] 
     (a) A custodian may deliver or pay to the minor or expend 
for the minor's benefit so much of the custodial property as the 
custodian considers advisable for the use and benefit of the 
minor, without court order and without regard to (i) the duty or 
ability of the custodian personally or of any other person to 
support the minor, or (ii) any other income or property of the 
minor which may be applicable or available for that purpose.  
     (b) On petition of an interested person or the minor if the 
minor has attained the age of 14 years, the court may order the 
custodian to deliver or pay to the minor or expend for the 
minor's benefit so much of the custodial property as the court 
considers advisable for the use and benefit of the minor.  
    (c) A delivery, payment, or expenditure under this section 
is in addition to, not in substitution for, and does not affect 
any obligation of a person to support the minor.  
     Sec. 15.  [527.35] [CUSTODIAN'S EXPENSES, COMPENSATION, AND 
BOND.] 
     (a) A custodian is entitled to reimbursement from custodial 
property for reasonable expenses incurred in the performance of 
the custodian's duties.  
     (b) Except for one who is a transferor under section 4, a 
custodian has a noncumulative election during each calendar year 
to charge reasonable compensation for services performed during 
that year.  
    (c) Except as provided in section 18, paragraph (f), a 
custodian need not give a bond.  
    Sec. 16.  [527.36] [EXEMPTION OF THIRD PERSON FROM 
LIABILITY.] 
    A third person in good faith and without court order may 
act on the instructions of or otherwise deal with any person 
purporting to make a transfer or purporting to act in the 
capacity of a custodian and, in the absence of knowledge, is not 
responsible for determining:  
    (1) the validity of the purported custodian's designation; 
    (2) the propriety of, or the authority under this chapter 
for, any act of the purported custodian;  
    (3) the validity or propriety under this chapter of any 
instrument or instructions executed or given either by the 
person purporting to make a transfer or by the purported 
custodian; or 
    (4) the propriety of the application of any property of the 
minor delivered to the purported custodian.  
    Sec. 17.  [527.37] [LIABILITY TO THIRD PERSONS.] 
    (a) A claim based on (i) a contract entered into by a 
custodian acting in a custodial capacity, (ii) an obligation 
arising from the ownership or control of custodial property, or 
(iii) a tort committed during the custodianship, may be asserted 
against the custodial property by proceeding against the 
custodian in the custodial capacity, whether or not the 
custodian or the minor is personally liable therefor.  
    (b) A custodian is not personally liable:  
    (1) on a contract properly entered into in the custodial 
capacity unless the custodian fails to reveal that capacity and 
to identify the custodianship in the contract; or 
    (2) for an obligation arising from control of custodial 
property or for a tort committed during the custodianship unless 
the custodian is personally at fault.  
    (c) A minor is not personally liable for an obligation 
arising from ownership of custodial property or for a tort 
committed during the custodianship unless the minor is 
personally at fault. 
    Sec. 18.  [527.38] [RENUNCIATION, RESIGNATION, DEATH, OR 
REMOVAL OF CUSTODIAN; DESIGNATION OF SUCCESSOR CUSTODIAN.] 
    (a) A person nominated under section 3 or designated under 
section 9 as custodian may decline to serve by delivering a 
valid disclaimer to the person who made the nomination or to the 
transferor or the transferor's legal representative.  If the 
event giving rise to a transfer has not occurred and no 
substitute custodian able, willing, and eligible to serve was 
nominated under section 3, the person who made the nomination 
may nominate a substitute custodian under section 3; otherwise 
the transferor or the transferor's legal representative shall 
designate a substitute custodian at the time of the transfer, in 
either case from among the persons eligible to serve as 
custodian for that kind of property under section 9, paragraph 
(a).  The custodian so designated has the rights of a successor 
custodian.  
    (b) A custodian at any time may designate a trust company 
or an adult other than a transferor under section 4 as successor 
custodian by executing and dating an instrument of designation 
before a subscribing witness other than the successor.  If the 
instrument of designation does not contain or is not accompanied 
by the resignation of the custodian, the designation of the 
successor does not take effect until the custodian resigns, 
dies, becomes incapacitated, or is removed.  
    (c) A custodian may resign at any time by delivering 
written notice to the minor if the minor has attained the age of 
14 years and to the successor custodian and by delivering the 
custodial property to the successor custodian.  
     (d) If a custodian is ineligible, dies, or becomes 
incapacitated without having effectively designated a successor 
and the minor has attained the age of 14 years, the minor may 
designate as successor custodian, in the manner prescribed in 
paragraph (b), an adult member of the minor's family, a 
conservator of the minor, or a trust company.  If the minor has 
not attained the age of 14 years or fails to act within 60 days 
after the ineligibility, death, or incapacity, the conservator 
of the minor becomes successor custodian.  If the minor has no 
conservator or the conservator declines to act, the transferor, 
the legal representative of the transferor or of the custodian, 
an adult member of the minor's family, or any other interested 
person may petition the court to designate a successor custodian.
    (e) A custodian who declines to serve under paragraph (a) 
or resigns under paragraph (c), or the legal representative of a 
deceased or incapacitated custodian, as soon as practicable, 
shall put the custodial property and records in the possession 
and control of the successor custodian.  The successor custodian 
by action may enforce the obligation to deliver custodial 
property and records and becomes responsible for each item as 
received.  
    (f) A transferor, the legal representative of a transferor, 
an adult member of the minor's family, a guardian of the person 
of the minor, the conservator of the minor, or the minor if the 
minor has attained the age of 14 years may petition the court to 
remove the custodian for cause and to designate a successor 
custodian other than a transferor under section 4 or to require 
the custodian to give appropriate bond.  
     Sec. 19.  [527.39] [ACCOUNTING BY AND DETERMINATION OF 
LIABILITY OF CUSTODIAN.] 
     (a) A minor who has attained the age of 14 years, the 
minor's guardian of the person or legal representative, an adult 
member of the minor's family, a transferor, or a transferor's 
legal representative may petition the court (i) for an 
accounting by the custodian or the custodian's legal 
representative; or (ii) for a determination of responsibility, 
as between the custodial property and the custodian personally, 
for claims against the custodial property unless the 
responsibility has been adjudicated in an action under section 
17 to which the minor or the minor's legal representative was a 
party.  
     (b) A successor custodian may petition the court for an 
accounting by the predecessor custodian.  
    (c) The court, in a proceeding under this chapter or in any 
other proceeding, may require or permit the custodian or the 
custodian's legal representative to account.  
    (d) If a custodian is removed under section 18, paragraph 
(f), the court shall require an accounting and order delivery of 
the custodial property and records to the successor custodian 
and the execution of all instruments required for transfer of 
the custodial property.  
    Sec. 20.  [527.40] [TERMINATION OF CUSTODIANSHIP.] 
    The custodian shall transfer in an appropriate manner the 
custodial property to the minor or to the minor's estate upon 
the earlier of: 
     (1) the minor's attainment of 21 years of age with respect 
to custodial property transferred under section 4 or 5; 
     (2) the minor's attainment of age 18 with respect to 
custodial property transferred under section 6 or 7; or 
     (3) the minor's death.  
     Sec. 21.  [527.41] [APPLICABILITY.] 
    Sections 1 to 20 apply to a transfer within the scope of 
section 2 made after their effective date if:  
     (1) the transfer purports to have been made under sections 
527.01 to 527.11; or 
     (2) the instrument by which the transfer purports to have 
been made uses in substance the designation "as custodian under 
the uniform gifts to minors act" or "as custodian under the 
uniform transfers to minors act" of any other state, and the 
application of sections 1 to 20 is necessary to validate the 
transfer. 
    Sec. 22.  [527.42] [EFFECT ON EXISTING CUSTODIANSHIPS.] 
    (a) Any transfer of custodial property as now defined in 
sections 1 to 20 made before January 1, 1986, is validated 
notwithstanding that there was no specific authority in sections 
527.01 to 527.11 for the coverage of custodial property of that 
kind or for a transfer from that source at the time the transfer 
was made.  
    (b) Sections 1 to 20 apply to all transfers made before 
January 1, 1986, in a manner and form prescribed in sections 
527.01 to 527.11, except insofar as the application impairs 
constitutionally vested rights or extends the duration of 
custodianships in existence before January 1, 1986.  
    (c) Sections 1 and 20 with respect to the age of a minor 
for whom custodial property is held under those sections do not 
apply to custodial property held in a custodianship that 
terminated because of the minor's attainment of the age of 18 
after May 31, 1973, and before January 1, 1986.  
     Sec. 23.  [527.43] [SAVINGS PROVISION.] 
    To the extent that sections 1 to 20, by virtue of section 
22, paragraph (b), do not apply to transfers made in a manner 
prescribed in sections 527.01 to 527.11 or to the powers, 
duties, and immunities conferred by transfers in that manner 
upon custodians and persons dealing with custodians, the repeal 
of sections 527.01 to 527.11 does not affect those transfers or 
those powers, duties, and immunities.  
    Sec. 24.  [527.44] [SHORT TITLE.] 
    This chapter may be cited as the "Minnesota uniform 
transfers to minors act."  
    Sec. 25.  [REPEALER.] 
    Minnesota Statutes 1984, sections 527.01, 527.02, 527.03, 
527.035, 527.04, 527.05, 527.06, 527.07, 527.08, 527.09, 527.10, 
and 527.11, are repealed.  
    Sec. 26.  [EFFECTIVE DATE.] 
    This act is effective January 1, 1986. 
    Approved May 23, 1985