OLR Bill Analysis
sSB 1047 (as amended by House “A”)*
AN ACT CONCERNING THE CONNECTICUT UNIFORM TRANSFERS TO MINORS ACT.
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 custodian has a good faith belief that the distribution to the trust is in the minor's best interest;
2. the trust make the minor the sole beneficiary during the minor's life;
3. it meets federal tax requirements that (a) the trust authorize the property to be expended by or for the benefit of the minor before age 21 and (b) the property 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
4. if the trust's terms give the minor the right to withdraw the assets at age 21, the trust must also give the minor the right to withdraw assets at age 25 and the trustee must give the minor written notice of the withdrawal right by certified mail or similar means on or before age 21 and, if assets remain, on or before age 25.
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 the applicable age or receives notice, whichever is later. The right to withdraw does not lapse if the minor does not receive notice.
The bill provides that a distribution to a trust in this manner terminates the custodianship for the distributed property.
As for deliveries, payments, or expenditures under current law, the bill provides that a distribution is in addition to and does not substitute for or affect anyone's obligation to support a minor.
*House Amendment “A” (1) requires the custodian to have a good faith belief that distributing some or all of the custodial property to the trust is in the minor's best interest; (2) adds provisions about the right to withdraw remaining assets at age 25; and (3) specifies that the right to withdraw does not lapse if the minor does not receive notice.
EFFECTIVE DATE: October 1, 2007
Joint Favorable Substitute