Uniform Transfers to Minors Act (UTMA)

In Ferraro v. Ferraro, a new unpublished (not precedential) decision from the Appellate Division, the Court reaffirmed the notion that gifts made to children under the Uniform Transfers to Minors Act (UTMA) are "in addition to, not in substitution for, and does not affect any obligation of a person to support the minor." 

Before getting into the relevant facts in Ferraro, a brief review of UTMA’s underlying legal principles is instructive.  Generally, UTMA allows for the transfer "by irrevocable gift" to a custodian for a minor’s benefit.  The Appellate Division noted the statutory provision applicable to securities, which requires that such gifted securities be registered by the giftor in his or her own name, with the subsequent notation, "as custodian for . . . under the New Jersey Uniform Transfers to Minors Act."  The law establishes that the custodian’s responsibilities over such gifts include collecting, holding, managing, investing and reinvesting the custodial property for the minor’s benefit.  As highlighted at the outset of this entry, since the gift is vested in the children, it cannot be used by a parent custodian – who has a fiduciary duty over the gift – to fulfill his or her child support obligation.  It is for that reason why the gift must, unless stated otherwise, be transferred to the minor upon the minor turning 21 years old or the minor’s death.

Continue Reading Gifts Under The Uniform Transfers to Minors Act – An Addition to Child Support