Legal Talk Texas: Give generously but give wisely

By Mark Mayer

Giving a gift to a child this holiday season? If it is of significant value, then you may have concerns about the child managing or properly handling such a gift.

Here are two alternative ways to gift wisely to a minor.

Create a Trust and appoint a Trustee to manage the gift for the child. This common Estate Planning vehicle could receive gifts for years to assist the minor as they attend college or start their adult life. In a Trust, you can dictate when the minor gains control over the Trust assets.

OR … you can use the Texas Transfer to Minors Act to create a legal custodian of assets for a minor. It is simple, effective, and protects gifts to a minor from mismanagement, wasteful spending, or depreciating physical assets. The Transfer to Minors Act can be used to gift financial assets, vehicles, real property, or precious heirlooms without leaving them to the whims of a minor.

Here is a form to create a valid custodial transfer: I, ____________________ (your name) hereby transfer to ____________________ (name of custodian), as custodian for ____________________ (name of minor) under the Texas Uniform Transfers to Minors Act, the following:  (sufficient property description).

Dated:  ____________________

____________________(Your Signature)

I, ____________________ (name of custodian) acknowledge receipt of the property described above as custodian for the minor named above under the Texas Uniform Transfers to Minors Act.

Dated:  ____________________

____________________(Signature of Custodian)

In dealing with custodial property, a custodian must prudently manage the property for the benefit of the minor. The custodian has discretion to make distributions directly to the minor or for the benefit of the minor. The minor will receive the assets on their 21^st birthday.

As always, consult legal and/or tax experts to properly document the transaction and reap all the benefits.

Attorney Mark Mayer is an attorney at Hammerle Finley Law Firm, a boutique law firm offering services in estate planning, probate, guardianship, business law, litigation, and real estate.  Contact him at (972) 436-9300. This article does not constitute as legal advice.

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