by Joseph Cook, Esq.
The Uniform Transfers to Minors Act:
The 49th State
After I worked sporadically alongside
others over the last fourteen years to encourage our legislators to adopt the Uniform Transfers to Minors Act (“UTMA”),
and after its eight prior legislative introductions, last year Vermont joined forty-eight
other states in adopting the act. Governor
Shumlin signed H.23 on April 16, 2015, and
it became effective on July 1, 2015. The act
is codified at 14 V.S.A. § 3211, et seq. Now
only South Carolina has yet to adopt the
UTMA. This article will summarize how the
UTMA became law, and some of its more
important provisions.
Professor Stephanie Willbanks serves on
the Uniform Law Commission. Her testimony before the House and Senate Judiciary committees was instrumental in the
passage of the UTMA. Professor Willbanks
asked Rep. Sarah Buxton to sponsor the
UTMA, and she agreed to do so. It helped
that our bill was the first item on the agenda for the House Judiciary Committee, and
cost our state nothing at a time when our
legislature needed to make difficult decisions to eliminate a large budget deficit.
Mark Langan and Chris D’Elia of the Vermont Bankers Association also provided
very helpful testimony.
Perhaps most importantly, the UTMA enables custodians to retain property until
beneficiaries attain the age of twenty-one
by defining adults as individuals who have
reached that age.1 An unintended consequence of the reduction of the age of majority to eighteen has been the outright
distribution of substantial assets to many
young adults at an especially impressionable age.
The UTMA greatly expands the scope
of property that custodians can hold and
in which they can invest on behalf of minors. The comment under the model act
states: “The definition of ‘custodial property’ has been generalized and expanded
to encompass every conceivable legal or
equitable interest in property of any kind,
including real estate and tangible or intangible personal property.”
Under the UTMA custodians have greater leeway in making distributions to minors
from custodial property. Expenditures may
now be made for “the use and benefit of
the minor ... ” rather than for “the support,
maintenance, education and benefit of the
minor ... ” as had been the case under the
Uniform Gifts to Minors Act.2 Custodial
funds may be used for minors without consideration of the duty or ability of others
www.vtbar.org
to support the minor and minors’ income,
resources, or other means of support.3 Expenditures under this section are in addition to, and do not affect the obligations of
others to support minors.4
Section 3222 (b) of the act states that
custodians “shall observe the stand \