File No. 590

Senate, April 26, 2007

The Committee on Judiciary reported through SEN. MCDONALD of the 27th Dist., Chairperson of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT CONCERNING THE CONNECTICUT UNIFORM TRANSFERS TO MINORS ACT.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 45a-558k of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2007):

(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 (1) the duty or ability of the custodian personally or of any other person to support the minor, or (2) any other income or property of the minor which may be applicable or available for that purpose.

(b) A custodian may distribute all or part of the custodial property to a trust, including a trust created by the custodian, at any time and without court order, provided: (1) The minor is the sole beneficiary of the trust during the minor's lifetime; (2) the trust satisfies the requirements of Section 2503(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and the regulations implementing said section; and (3) if the terms of the trust grant to the minor a right to withdraw the trust assets upon the minor's attainment of twenty-one years of age, (A) the trustee shall notify the minor in writing, by certified mail or similar means of delivery, of such right to withdraw, and (B) the time period during which such withdrawal may be made shall not be less than thirty days from the date the minor attains the age of twenty-one years or the date the minor receives such notification, whichever date is later. Such right to withdraw shall not lapse if the notification required by subparagraph (A) of subdivision (3) of this subsection is not received by the minor. Any distribution to a trust pursuant to this subsection terminates the custodianship to the extent of the custodial property so distributed. The provisions of this subsection shall apply to any custodianship under sections 45a-557 to 45a-560b, inclusive, in existence on or after the effective date of this section.

[(b)] (c) On petition of an interested person or the minor if the minor has attained the age of twelve 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)] (d) A delivery, payment, [or] expenditure or distribution 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. 2. Section 45a-559e of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2007):

The custodian shall transfer in an appropriate manner the custodial property to the minor, the legal representative of the minor or the personal representative of the minor's estate upon the earlier of (1) the minor's attainment of twenty-one years of age, or (2) the minor's death, unless a prior distribution of the custodial property has been made pursuant to subsection (b) of section 45a-558k, as amended by this act.

The following fiscal impact statement and bill analysis are prepared for the benefit of members of the General Assembly, solely for the purpose of information, summarization, and explanation, and do not represent the intent of the General Assembly or either chamber thereof for any purpose:

OFA Fiscal Note

State Impact: None

Municipal Impact: None

Explanation

The bill is not expected to have a revenue impact since it does not alter the tax laws regarding gifts to minors.

The Out Years

State Impact: None

Municipal Impact: None



OLR Bill Analysis

sSB 1047

AN ACT CONCERNING THE CONNECTICUT UNIFORM TRANSFERS TO MINORS ACT.

SUMMARY:

The Uniform Transfers to Minors Act allows a person to transfer property to a custodian for the benefit of a minor. The custodian manages the property and can distribute money to or for the benefit of the minor.

Under current law, the custodian must transfer the property to the minor when the minor turns 21. This bill gives the custodian the option to distribute all or part of the property to a trust, at any time before the minor turns 21 and without court order, under certain conditions. The conditions are that:

1. the trust make the minor the sole beneficiary during the minor's life;

2. it meet federal tax provisions that require (a) the trust to authorize the property to be expended by or for the benefit of the minor before age 21 and (b) the property to pass to the minor at age 21 or the minor's estate if he or she dies before age 21, but the minor can extend the trust on turning 21; and

3. if the trust's terms give the minor the right to withdraw the assets at age 21, the trustee give the minor written notice by certified mail or similar means.

Regarding the right to withdrawal, the bill provides that the right does not lapse unless the minor receives notice and the time allowed for withdrawal is at least 30 days after the minor turns 21 or receives notice, whichever is later.

The bill provides that a distribution to a trust in this manner terminates the custodianship for the distributed property.

EFFECTIVE DATE: October 1, 2007

COMMITTEE ACTION

Judiciary Committee

Joint Favorable Substitute