To Make a Gift to a Minor Beneficiary, Do You Always Need to Set Up a Trust?

HNWElder Law, Estate Planning

  • Consider making a gift to a minor by way of the Uniform Transfer to Minors Act or the Uniform Gift to Minors Act instead of setting up a trust.

Uniform Transfers to Minors ActThe answer to the topic of this blog is no, not always.  Sometimes there are situations where a trust is overkill or situations where a gift can be made without a lot of paperwork.

Legally, until a child turns eighteen, he or she can’t own property in his or her own name.   Leaving something of value to a minor child in your Will, or making a gift to a minor while alive, requires that property be held by someone else-such as an adult or a fiduciary eligible to hold that property for the minor.

Most people think that the only way to make gifts to a minor is to establish a trust.  A trustee manages the trust funds and makes distributions for the benefit of the minor, who is the “beneficiary” of the trust.  While trusts are a great way to hold property for a minor, there are situations where a Trust is just way too much.  A trust can be expensive to set up and maintain.  As an alternative, the Uniform Transfers to Minors Act (“UTMA”) or Uniform Gifts to Minors Act account may be your solution.

To make a gift to a minor under UTMA, you designate a “custodian” who receives the property and safeguards it for the minor.  For purposes of UTMA, a “minor” is not someone under age 21.

The custodian of the UTMA can use the assets in the account for the benefit of the minor.  Unlike a trust, you can’t limit the uses to which an UTMA account can be used (e.g. education only).  But this may not be a big deal.

In New Jersey, a custodian can be designated in the written document that establishes the account.  Virtually, all property is eligible for this account.

A UTMA account can be named as a beneficiary for life insurance or a retirement account.  Naming an UTMA custodian is often an option for a beneficiary designation form, but you need to be sure that the form is filled out in a way that makes it clear that you intend the funds to go to a custodian for the benefit of the minor.

To discuss your NJ trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq., of Hanlon Niemann & Wright, a Freehold Township, Monmouth County NJ Trust Attorney

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