By Hilbert H.B. No. 2268
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the adoption of the Texas Uniform Transfers to Minors
1-3 Act.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Chapter 141, Property Code, is amended to read as
1-6 follows:
1-7 Sec. 1. SHORT TITLE. This chapter may be cited as the Texas
1-8 Uniform Transfers to Minors Act.
1-9 Sec. 2. DEFINITIONS. In this chapter:
1-10 (1) "Adult" means an individual who is at least 21
1-11 years of age.
1-12 (2) "Benefit plan" means an employer's plan for the
1-13 benefit of an employee or partner or an individual retirement
1-14 account.
1-15 (3) "Broker" means a person lawfully engaged in the
1-16 business of effecting transactions in securities or commodities for
1-17 the person's own account or for the account of another.
1-18 (4) "Court" means a court with original probate
1-19 jurisdiction.
1-20 (5) "Custodial property" means:
1-21 (A) any interest in property transferred to a
1-22 custodian under this chapter; and
1-23 (B) the income from and proceeds of that
1-24 interest in property.
2-1 (6) "Custodian" means a person designated as a
2-2 custodian under Section 10 or a successor or substitute custodian
2-3 designated under Section 19.
2-4 (7) "Financial institution" means a bank, trust
2-5 company, savings institution, or credit union chartered and
2-6 supervised under state or federal law.
2-7 (8) "Guardian" means a person appointed or qualified
2-8 by a court to act as general, limited, or temporary guardian of a
2-9 minor's property or a person legally authorized to perform
2-10 substantially the same functions.
2-11 (9) "Legal representative" means an executor,
2-12 independent executor, administrator or independent administrator of
2-13 a decedent's estate, an obligor under a benefit plan or other
2-14 governing instrument, a successor legal representative, or a person
2-15 legally authorized to perform substantially the same functions.
2-16 (10) "Member of the minor's family" means the minor's
2-17 parent, stepparent, spouse, grandparent, brother, sister, uncle, or
2-18 aunt, whether of whole or half blood or by adoption.
2-19 (11) "Minor" means an individual who is younger than
2-20 21 years of age.
2-21 (12) "Transfer" means a transaction that creates
2-22 custodial property under Section 10.
2-23 (13) "Transferor" means a person who makes a transfer
2-24 under this chapter.
2-25 (14) "Trust company" means a financial institution,
2-26 corporation, or other legal entity authorized to exercise general
2-27 trust powers.
3-1 Sec. 3. SCOPE AND JURISDICTION. (a) This chapter applies
3-2 to a transfer that refers to the Texas Uniform Transfers to Minors
3-3 Act in the designation under Section 10(a) by which the transfer is
3-4 made if at the time of the transfer, the transferor, the minor, or
3-5 the custodian is a resident of this state or the custodial property
3-6 is located in this state. The custodianship created under Section
3-7 10 remains subject to this chapter despite a subsequent change in
3-8 residence of a transferor, the minor, or the custodian or the
3-9 removal of custodial property from this state.
3-10 (b) A person designated as custodian under this chapter is
3-11 subject to personal jurisdiction in this state with respect to any
3-12 matter relating to the custodianship.
3-13 (c) A transfer that purports to be made and that is valid
3-14 under the Uniform Transfers to Minors Act, the Uniform Gifts to
3-15 Minors Act, or a substantially similar act of another state is
3-16 governed by the law of the designated state and may be executed and
3-17 is enforceable in this state if at the time of the transfer, the
3-18 transferor, the minor, or the custodian is a resident of the
3-19 designated state or the custodial property is located in the
3-20 designated state.
3-21 Sec. 4. NOMINATION OF CUSTODIAN. (a) A person having the
3-22 right to designate the recipient of property transferable on the
3-23 occurrence of a future event may revocably nominate a custodian to
3-24 receive the property for a minor beneficiary on the occurrence of
3-25 that event by naming the custodian followed in substance by the
3-26 words: "as custodian for (name of minor) under the Texas
3-27 Uniform Transfers to Minors Act." The nomination may name one or
4-1 more persons as substitute custodians to whom the property must be
4-2 transferred, in the order named, if the first nominated custodian
4-3 dies before the transfer or is unable, declines, or is ineligible
4-4 to serve. The nomination may be made in a will, a trust, a deed,
4-5 an instrument exercising a power of appointment, or in a writing
4-6 designating a beneficiary of contractual rights that is registered
4-7 with or delivered to the payor, issuer, or other obligor of the
4-8 contractual rights.
4-9 (b) A custodian nominated under this section must be a
4-10 person to whom a transfer of property of that kind may be made
4-11 under Section 10(a).
4-12 (c) The nomination of a custodian under this section does
4-13 not create custodial property until the nominating instrument
4-14 becomes irrevocable or a transfer to the nominated custodian is
4-15 completed under Section 10. Unless the nomination of a custodian
4-16 has been revoked, the custodianship becomes effective on the
4-17 occurrence of the future event, and the custodian shall enforce a
4-18 transfer of the custodial property under Section 10.
4-19 Sec. 5. TRANSFER BY GIFT OR EXERCISE OF POWER OF
4-20 APPOINTMENT. A person may make a transfer by irrevocable gift to,
4-21 or the irrevocable exercise of a power of appointment in favor of,
4-22 a custodian for the benefit of a minor under Section 10.
4-23 Sec. 6. TRANSFER AUTHORIZED BY WILL OR TRUST. (a) A legal
4-24 representative or trustee may make an irrevocable transfer under
4-25 Section 10 to a custodian for a minor's benefit as authorized in
4-26 the governing will or trust.
4-27 (b) If the testator or settlor has nominated a custodian
5-1 under Section 4 to receive the custodial property, the transfer
5-2 must be made to that person.
5-3 (c) If the testator or settlor has not nominated a custodian
5-4 under Section 4, or all persons nominated as custodian die before
5-5 the transfer or are unable, decline, or are ineligible to serve,
5-6 the legal representative or the trustee shall designate the
5-7 custodian from among those persons eligible to serve as custodian
5-8 for property of that kind under Section 10(a).
5-9 Sec. 7. OTHER TRANSFER BY FIDUCIARY. (a) Subject to
5-10 Subsections (b) and (c), a guardian, legal representative, or
5-11 trustee may make an irrevocable transfer to another adult or trust
5-12 company as custodian for a minor's benefit under Section 10 in the
5-13 absence of a will or under a will or trust that does not contain an
5-14 authorization to do so.
5-15 (b) With the approval of the court supervising the
5-16 guardianship, a guardian may make an irrevocable transfer to
5-17 another adult or trust company as custodian for the minor's benefit
5-18 under Section 10.
5-19 (c) A transfer under Subsection (a) or (b) may be made only
5-20 if:
5-21 (1) the legal representative or trustee considers the
5-22 transfer to be in the best interest of the minor;
5-23 (2) the transfer is not prohibited by or inconsistent
5-24 with provisions of the applicable will, trust agreement, or other
5-25 governing instrument; and
5-26 (3) the transfer is authorized by the court if it
5-27 exceeds $10,000 in value.
6-1 Sec. 8. TRANSFER BY OBLIGOR. (a) Subject to Subsections
6-2 (b) and (c), a person who is not subject to Section 6 or 7 and who
6-3 holds property of or owes a liquidated debt to a minor who does not
6-4 have a guardian may make an irrevocable transfer to a custodian for
6-5 the benefit of the minor under Section 10.
6-6 (b) If a person who has the right to nominate a custodian
6-7 under Section 4 has nominated a custodian under that section to
6-8 receive the custodial property, the transfer must be made to that
6-9 person.
6-10 (c) If a custodian has not been nominated under Section 4,
6-11 or all persons nominated as custodian die before the transfer or
6-12 are unable, decline, or are ineligible to serve, a transfer under
6-13 this section may be made to an adult member of the minor's family
6-14 or to a trust company unless the property exceeds $10,000 in value.
6-15 Sec. 9. RECEIPT FOR CUSTODIAL PROPERTY. A written
6-16 acknowledgment of delivery by a custodian constitutes a sufficient
6-17 receipt and discharge for custodial property transferred to the
6-18 custodian under this chapter.
6-19 Sec. 10. MANNER OF CREATING CUSTODIAL PROPERTY AND EFFECTING
6-20 TRANSFER; DESIGNATION OF INITIAL CUSTODIAN; CONTROL. (a)
6-21 Custodial property is created and a transfer is made when:
6-22 (1) an uncertificated security or a certificated
6-23 security in registered form is:
6-24 (A) registered in the name of the
6-25 transferor, an adult other than the transferor, or a trust
6-26 company, followed in substance by the words: "as custodian
6-27 for (name of minor) under the Texas Uniform Transfers to
7-1 Minors Act"; or
7-2 (B) delivered if in certificated form, or any
7-3 document necessary for the transfer of an uncertificated security
7-4 is delivered, with any necessary endorsement to an adult other than
7-5 the transferor or to a trust company as custodian, accompanied by
7-6 an instrument in substantially the form set forth in Subsection
7-7 (b);
7-8 (2) money is paid or delivered, or a security held in
7-9 the name of a broker, financial institution, or its nominee is
7-10 transferred, to a broker or financial institution for credit to an
7-11 account in the name of the transferor, an adult other than the
7-12 transferor, or a trust company, followed in substance by the words:
7-13 "as custodian for (name of minor) under the Texas Uniform
7-14 Transfers to Minors Act";
7-15 (3) the ownership of a life or endowment insurance
7-16 policy or annuity contract is:
7-17 (A) registered with the issuer in the name of
7-18 the transferor, an adult other than the transferor, or a trust
7-19 company, followed in substance by the words: "as custodian for
7-20 (name of minor) under the Texas Uniform Transfers to Minors
7-21 Act"; or
7-22 (B) assigned in a writing delivered to an adult
7-23 other than the transferor or to a trust company whose name in the
7-24 assignment is followed in substance by the words: "as custodian
7-25 for (name of minor) under the Texas Uniform Transfers to
7-26 Minors Act";
7-27 (4) an irrevocable exercise of a power of appointment
8-1 or an irrevocable present right to future payment under a contract
8-2 is the subject of a written notification delivered to the payor,
8-3 issuer, or other obligor that the right is transferred to the
8-4 transferor, an adult other than the transferor, or a trust company,
8-5 whose name in the notification is followed in substance by the
8-6 words: "as custodian for (name of minor) under the Texas
8-7 Uniform Transfers to Minors Act";
8-8 (5) an interest in real property is conveyed by
8-9 instrument recorded in the real property records in the
8-10 county in which the real property is located to the
8-11 transferor, an adult other than the transferor, or a trust
8-12 company, followed in substance by the words: "as
8-13 custodian for (name of minor) under the Texas Uniform
8-14 Transfers to Minors Act";
8-15 (6) a certificate of title issued by a department or
8-16 agency of a state or of the United States that evidences title to
8-17 tangible personal property is:
8-18 (A) issued in the name of the transferor, an
8-19 adult other than the transferor, or a trust company, followed in
8-20 substance by the words: "as custodian for (name of minor)
8-21 under the Texas Uniform Transfers to Minors Act"; or
8-22 (B) delivered to an adult other than the
8-23 transferor or to a trust company, endorsed to that person
8-24 followed in substance by the words: "as a custodian
8-25 for (name of minor) under the Texas Uniform Transfers to
8-26 Minors Act"; or
8-27 (7) an interest in any property not described in
9-1 Subdivisions (1)-(6) is transferred to an adult other than the
9-2 transferor or to a trust company by a written instrument in
9-3 substantially the form set forth in Subsection (b).
9-4 (b) An instrument in the following form satisfies the
9-5 requirements of Subsections (a)(1)(B) and (7):
9-6 TRANSFER UNDER THE TEXAS
9-7 UNIFORM TRANSFERS TO MINORS ACT
9-8 I, _____________________________ (name of transferor or name
9-9 and representative capacity if a fiduciary) hereby transfer to
9-10 __________________ (name of custodian), as custodian for
9-11 _______________ (name of minor) under the Texas Uniform Transfers
9-12 to Minors Act, the following: (insert a description of the
9-13 custodial property sufficient to identify it).
9-14 Dated: ___________________
9-15 __________________________(Signature)
9-16 ____________________________ (name of custodian) acknowledges
9-17 receipt of the property described above as custodian for the minor
9-18 named above under the Texas Uniform Transfers to Minors Act.
9-19 Dated: ________________________
9-20 _______________________________
9-21 _______(Signature of Custodian)
9-22 (c) A transferor shall place the custodian in control of the
9-23 custodial property as soon as practicable.
9-24 Sec. 11. SINGLE CUSTODIANSHIP. A transfer may be made only
9-25 for one minor, and only one person may be the custodian. All
9-26 custodial property held under this chapter by the same custodian
9-27 for the benefit of the same minor constitutes a single
10-1 custodianship.
10-2 Sec. 12. VALIDITY AND EFFECT OF TRANSFER. (a) The validity
10-3 of a transfer made in a manner prescribed by this chapter is not
10-4 affected by the:
10-5 (1) transferor's failure to comply with Section 10(c)
10-6 concerning possession and control;
10-7 (2) designation of an ineligible custodian, except
10-8 designation of the transferor in the case of property for which the
10-9 transferor is ineligible to serve as custodian under Section 10(a);
10-10 or
10-11 (3) death or incapacity of a person nominated under
10-12 Section 4 or designated under Section 10 as custodian or the
10-13 disclaimer of the office by that person.
10-14 (b) A transfer made under Section 10 is irrevocable, and the
10-15 custodial property is indefeasibly vested in the minor. The
10-16 custodian has all the rights, powers, duties, and authority
10-17 provided in this chapter, and the minor or the minor's legal
10-18 representative does not have any right, power, duty, or authority
10-19 with respect to the custodial property except as provided by this
10-20 chapter.
10-21 (c) By making a transfer, the transferor incorporates all
10-22 the provisions of this chapter in the disposition and grants to the
10-23 custodian, or to any third person dealing with a person designated
10-24 as custodian, the respective powers, rights and immunities provided
10-25 by this chapter.
10-26 Sec. 13. CARE OF CUSTODIAL PROPERTY. (a) A custodian
10-27 shall:
11-1 (1) take control of custodial property;
11-2 (2) register or record title to custodial property if
11-3 appropriate; and
11-4 (3) collect, hold, manage, sell, convey, invest, and
11-5 reinvest custodial property.
11-6 (b) In dealing with custodial property, a custodian shall
11-7 observe the standard of care that would be observed by a prudent
11-8 person dealing with property of another and is not limited by any
11-9 other statute restricting investments by fiduciaries. If a
11-10 custodian has a special skill or expertise, the custodian shall use
11-11 that skill or expertise. However, a custodian, in the custodian's
11-12 discretion and without liability to the minor or the minor's
11-13 estate, may retain any custodial property received from a
11-14 transferor.
11-15 (c) A custodian may invest in or pay premiums on life
11-16 insurance or endowment policies on the life of:
11-17 (1) the minor only if the minor or the minor's estate
11-18 is the sole beneficiary; or
11-19 (2) another person in whom the minor has an insurable
11-20 interest only to the extent that the minor, the minor's estate, or
11-21 the custodian in the capacity of the custodian is the irrevocable
11-22 beneficiary.
11-23 (d) A custodian at all times shall keep custodial property
11-24 separate and distinct from all other property in a manner
11-25 sufficient to identify it clearly as custodial property of the
11-26 minor. Custodial property consisting of an undivided interest is
11-27 so identified if the minor's interest is held as a tenant in common
12-1 and is fixed. Custodial property subject to recordation is so
12-2 identified if it is recorded, and custodial property subject to
12-3 registration is so identified if it is registered, or held in an
12-4 account designated, in the name of the custodian followed in
12-5 substance by the words: "as custodian for ________________ (name
12-6 of minor) under the Texas Uniform Transfers to Minors Act."
12-7 (e) A custodian shall keep records of all transactions with
12-8 respect to custodial property, including information necessary for
12-9 the preparation of the minor's tax returns, and shall make the
12-10 records available for inspection at reasonable intervals by a
12-11 parent or legal representative of the minor or by the minor if the
12-12 minor is at least 14 years of age.
12-13 Sec. 14. POWERS OF CUSTODIAN. (a) A custodian, acting in a
12-14 custodial capacity, has all the rights, powers, and authority over
12-15 custodial property that unmarried adult owners have over their own
12-16 property, but a custodian may exercise those rights, powers, and
12-17 authority in that capacity only.
12-18 (b) This section does not relieve a custodian from liability
12-19 for breach of Section 13.
12-20 Sec. 15. USE OF CUSTODIAL PROPERTY. (a) A custodian may
12-21 deliver or pay to the minor or expend for the minor's benefit as
12-22 much of the custodial property as the custodian considers advisable
12-23 for the use and benefit of the minor, without court order and
12-24 without regard to:
12-25 (1) the duty or ability of the custodian personally or
12-26 of any other person to support the minor; or
12-27 (2) any other income or property of the minor that may
13-1 be applicable or available for that purpose.
13-2 (b) On petition of an interested person or the minor if the
13-3 minor is at least 14 years of age, the court may order the
13-4 custodian to deliver or pay to the minor or expend for the minor's
13-5 benefit as much of the custodial property as the court considers
13-6 advisable for the use and benefit of the minor.
13-7 (c) A delivery, payment, or expenditure under this section
13-8 is in addition to, not in substitution for, and does not affect any
13-9 obligation of a person to support the minor.
13-10 Sec. 16. CUSTODIAN'S EXPENSES, COMPENSATION, AND BOND. (a)
13-11 A custodian is entitled to reimbursement from custodial property
13-12 for reasonable expenses incurred in the performance of the
13-13 custodian's duties.
13-14 (b) Except for one who is a transferor under Section 5, a
13-15 custodian has a noncumulative election during each calendar year to
13-16 charge reasonable compensation for services performed by the
13-17 custodian during that year.
13-18 (c) Except as provided by Section 19(f), a custodian is not
13-19 required to give a bond.
13-20 Sec. 17. EXEMPTION OF THIRD PERSON FROM LIABILITY. A third
13-21 person, in good faith and without court order, may act on the
13-22 instructions of or otherwise deal with any person purporting to
13-23 make a transfer or act in the capacity of a custodian and, in the
13-24 absence of knowledge, is not responsible for determining the:
13-25 (1) validity of the purported custodian's designation;
13-26 (2) propriety of, or the authority under this chapter
13-27 for, any act of the purported custodian;
14-1 (3) validity or propriety under this chapter of any
14-2 instrument or instructions executed or given by the person
14-3 purporting to make a transfer or by the purported custodian; or
14-4 (4) propriety of the application of the minor's
14-5 property delivered to the purported custodian.
14-6 Sec. 18. LIABILITY TO THIRD PERSON. (a) A claim based on a
14-7 contract entered into by a custodian acting in a custodial
14-8 capacity, an obligation arising from the ownership or control of
14-9 custodial property, or a tort committed during the custodianship
14-10 may be asserted against the custodial property by proceeding
14-11 against the custodian in the custodian's custodial capacity,
14-12 whether or not the custodian or the minor is personally liable for
14-13 the claim.
14-14 (b) A custodian is not personally liable:
14-15 (1) on a contract properly entered into in the
14-16 custodian's custodial capacity unless the custodian fails to reveal
14-17 that capacity and to identify the custodianship in the contract; or
14-18 (2) for an obligation arising from control of
14-19 custodial property or for a tort committed during the custodianship
14-20 unless the custodian is personally at fault.
14-21 (c) A minor is not personally liable for an obligation
14-22 arising from ownership of custodial property or for a tort
14-23 committed during the custodianship unless the minor is personally
14-24 at fault.
14-25 Sec. 19. RENUNCIATION, RESIGNATION, DEATH, OR REMOVAL OF
14-26 CUSTODIAN; DESIGNATION OF SUCCESSOR CUSTODIAN. (a) A person
14-27 nominated to serve as a custodian under Section 4 or designated to
15-1 serve as a custodian under Section 10 may decline to serve as
15-2 custodian by delivering written notice to the person who made the
15-3 nomination or to the transferor's legal representative. If the
15-4 event giving rise to a transfer has not occurred and no substitute
15-5 custodian who is able, willing, and eligible to serve was nominated
15-6 under Section 4, the person who made the nomination may nominate a
15-7 substitute custodian under Section 4; otherwise the transferor or
15-8 the transferor's legal representative shall designate a substitute
15-9 custodian at the time of the transfer, in either case from among
15-10 the persons eligible to serve as custodian for that kind of
15-11 property under Section 10(a). A substitute custodian designated
15-12 under this section has the rights of a successor custodian.
15-13 (b) A custodian at any time may designate as successor
15-14 custodian a trust company or an adult other than a transferor under
15-15 Section 5 by executing and dating an instrument of designation
15-16 before a subscribing witness other than the successor. If the
15-17 instrument of designation does not contain or is not accompanied by
15-18 the custodian's resignation, the designation of the successor does
15-19 not take effect until the custodian resigns, dies, becomes
15-20 incapacitated, or is removed.
15-21 (c) A custodian may resign at any time by delivering:
15-22 (1) written notice to the successor custodian and to
15-23 the minor if the minor is at least 14 years of age; and
15-24 (2) the custodial property to the successor custodian.
15-25 (d) If a custodian is ineligible, dies, or becomes
15-26 incapacitated without having effectively designated a successor and
15-27 the minor is at least 14 years of age, the minor may designate as
16-1 successor custodian an adult member of the minor's family, a
16-2 guardian of the minor, or a trust company in the manner prescribed
16-3 by Subsection (b). If the minor is younger than 14 years of age or
16-4 fails to act within 60 days after the ineligibility, death, or
16-5 incapacity of the custodian, the minor's guardian becomes successor
16-6 custodian. If the minor has no guardian or the minor's guardian
16-7 declines to act, the transferor, the legal representative of the
16-8 transferor or of the custodian, an adult member of the minor's
16-9 family, or any other interested person may petition the court to
16-10 designate a successor custodian.
16-11 (e) As soon as practicable, a custodian who declines to
16-12 serve under Subsection (a) or resigns under Subsection (c), or the
16-13 legal representative of a deceased or incapacitated custodian,
16-14 shall put the custodial property and records in the possession and
16-15 control of the successor custodian. The successor custodian by
16-16 action may enforce the obligation to deliver custodial property and
16-17 records and becomes responsible for each item as received.
16-18 (f) A transferor, the legal representative of a transferor,
16-19 an adult member of the minor's family, a guardian of the person of
16-20 the minor, the guardian of the minor, or the minor if the minor is
16-21 at least 14 years of age may petition the court to:
16-22 (1) remove the custodian for cause and designate a
16-23 successor custodian other than a transferor under Section 5; or
16-24 (2) require the custodian to give appropriate bond.
16-25 Sec. 20. ACCOUNTING BY AND DETERMINATION OF LIABILITY. (a)
16-26 A minor who is at least 14 years of age, the minor's guardian of
16-27 the person or legal representative, an adult member of the minor's
17-1 family, a transferor, or a transferor's legal representative may
17-2 petition the court for:
17-3 (1) an accounting by the custodian or the custodian's
17-4 legal representative; or
17-5 (2) a determination of responsibility, as between the
17-6 custodial property and the custodian personally, for claims against
17-7 the custodial property unless the responsibility has been
17-8 adjudicated in an action under Section 18 to which the minor or the
17-9 minor's legal representative was a party.
17-10 (b) A successor custodian may petition the court for an
17-11 accounting by the predecessor custodian.
17-12 (c) The court, in a proceeding under this chapter or in any
17-13 other proceeding, may require or permit the custodian or the
17-14 custodian's legal representative to account.
17-15 (d) If a custodian is removed under Section 19(f), the court
17-16 shall require an accounting and order delivery of the custodial
17-17 property and records to the successor custodian and the execution
17-18 of all instruments required for transfer of the custodial property.
17-19 Sec. 21. TERMINATION OF CUSTODIANSHIP. The custodian shall
17-20 transfer in an appropriate manner the custodial property to the
17-21 minor or to the minor's estate on the earlier of the date:
17-22 (1) the minor attains 21 years of age, with respect to
17-23 custodial property transferred under Section 5 or 6;
17-24 (2) the minor attains the age of majority under the
17-25 laws of this state other than this chapter, with respect to
17-26 custodial property transferred under Section 7 or 8; or
17-27 (3) the minor's death.
18-1 Sec. 22. APPLICABILITY. This chapter applies to a transfer
18-2 within the scope of Section 3 made after September 1, 1995, if:
18-3 (1) the transfer purports to have been made under the
18-4 Texas Uniform Gifts to Minors Act; or
18-5 (2) the instrument by which the transfer purports to
18-6 have been made uses in substance the designation "as custodian
18-7 under the Uniform Gifts to Minors Act" or "as custodian under the
18-8 Uniform Transfers to Minors Act" of any other state, and the
18-9 application of this chapter is necessary to validate the transfer.
18-10 Sec. 23. EFFECT ON EXISTING CUSTODIANSHIPS. (a) Any
18-11 transfer of custodial property under this chapter made before
18-12 September 1, 1995, is validated notwithstanding that there was no
18-13 specific authority in this chapter for the coverage of custodial
18-14 property of that kind or for a transfer from that source at the
18-15 time the transfer was made.
18-16 (b) Sections 2 and 21, with respect to the age of a minor
18-17 for whom custodial property is held under this chapter, do not
18-18 apply to custodial property held in a custodianship that terminated
18-19 because the minor attained the age of 18 after August 26, 1973, and
18-20 before September 1, 1995.
18-21 Sec. 24. UNIFORMITY OF APPLICATION AND CONSTRUCTION. This
18-22 chapter shall be applied and construed to effect its general
18-23 purpose, to make uniform the law with respect to the subject of
18-24 this chapter among states enacting that law.
18-25 <SUBCHAPTER A. GENERAL PROVISIONS>
18-26 <Sec. 141.001. SHORT TITLE. This chapter may be cited as
18-27 the Texas Uniform Gifts to Minors Act.>
19-1 <Sec. 141.002. DEFINITIONS. In this chapter:>
19-2 <(1) "Adult" means an individual who is 18 years of
19-3 age or older.>
19-4 <(2) "Bank" means a state or national bank, a state or
19-5 federal savings and loan association, a federal credit union, or an
19-6 insured credit union chartered under the laws of this state.>
19-7 <(3) "Broker" means a person lawfully in the business
19-8 of effecting transactions in securities for the account of others.
19-9 The term includes a bank that effects those transactions. It also
19-10 includes a person who buys and sells securities for the person's
19-11 own account, through a broker or otherwise, as part of a regular
19-12 business.>
19-13 <(4) "Court" means a court with original probate
19-14 jurisdiction.>
19-15 <(5) "Custodial property" includes the property given
19-16 to a minor under this chapter, the income from the property, and
19-17 the direct and indirect proceeds from the disposition of the
19-18 property.>
19-19 <(6) "Custodian" means the person designated to hold
19-20 property given to a minor under this chapter.>
19-21 <(7) "Guardian" means a general guardian, guardian,
19-22 tutor, or curator of the property, estate, or person of a minor.>
19-23 <(8) "Issuer" means an individual, a firm, or a
19-24 corporation that places its name on a security, other than as
19-25 transfer agent, as evidence that the security represents a share,
19-26 right of participation, or other interest in property or an
19-27 enterprise or as evidence of a duty represented by the security,
20-1 including a substitute for the responsibilities of the issuer.>
20-2 <(9) "Legal representative" means the executor,
20-3 independent executor, administrator, independent administrator,
20-4 general guardian, guardian, committee, conservator, tutor, or
20-5 curator of a person's property or estate.>
20-6 <(10) "Life or endowment insurance policy" or "annuity
20-7 contract" means a life or endowment insurance policy or annuity
20-8 contract on the life of a minor or a member of the minor's family.>
20-9 <(11) "Member of a minor's family" means a minor's
20-10 parent, grandparent, brother, sister, aunt, or uncle, whether by
20-11 blood or adoption.>
20-12 <(12) "Minor" means an individual who is less than 18
20-13 years of age and who has never been married, except for an
20-14 individual whose disabilities of minority have been generally
20-15 removed.>
20-16 <(13) "Registered security" means a security that
20-17 identifies the owner of the security or the rights it evidences,
20-18 the transfer of which may be registered on the transfer books of
20-19 the issuer.>
20-20 <(14) "Security" means any interest or instrument
20-21 commonly known as a security, including a note, stock, treasury
20-22 stock, bond, debenture, evidence of indebtedness, collateral trust
20-23 certificate, transferable share, voting trust certificate,
20-24 investment contract, an oil, gas, or mining title or lease,
20-25 production payments under an oil, gas, or mining title or lease, as
20-26 well as a certificate of interest or participation in, a temporary
20-27 or interim receipt or certificate of deposit for, or a warrant or
21-1 right to subscribe to or purchase a security. The term does not
21-2 include an interest or instrument issued by the donor.>
21-3 <(15) "Transfer agent" means an individual, a firm, or
21-4 a corporation that is an authenticating trustee, registrar, or
21-5 other agent registering the issuance, transfer, or cancellation of
21-6 securities for an issuer.>
21-7 <(16) "Trust company" means a bank or company
21-8 authorized to exercise trust powers in this state.>
21-9 <Sec. 141.003. GIFTS TO MINORS. (a) An adult may make an
21-10 inter vivos gift under this chapter to an individual who is a minor
21-11 on the date of the gift by beneficiary designation with a company
21-12 that has issued a life or endowment insurance policy or annuity
21-13 contract.>
21-14 <(b) An adult may make an inter vivos or a testamentary gift
21-15 under this chapter to an individual who is a minor on the date of
21-16 the gift if the gift is:>
21-17 <(1) money;>
21-18 <(2) a security;>
21-19 <(3) a life or endowment insurance policy or its
21-20 proceeds;>
21-21 <(4) an annuity contract or its proceeds;>
21-22 <(5) real property; or>
21-23 <(6) tangible personal property.>
21-24 <(c) A legal representative of a decedent's estate who has
21-25 received letters of office or a trustee of a trust on behalf of a
21-26 minor who is an heir, legatee, or devisee of the decedent's estate
21-27 or a beneficiary of the trust may pay or transfer to a custodian
22-1 for the minor under this chapter or under a comparable Uniform
22-2 Gifts to Minors Act of another jurisdiction, without a court order,
22-3 property that is distributable to the minor and eligible for a gift
22-4 if:>
22-5 <(1) the representative or trustee considers the
22-6 distribution to be in the best interest of the minor; and>
22-7 <(2) the distribution is not expressly forbidden by a
22-8 will, trust agreement, court order, or other instrument governing
22-9 disposition of the property.>
22-10 <(d) A legal representative or trustee paying or
22-11 transferring property under Subsection (c) shall designate an adult
22-12 member of the minor's family or a guardian of the minor to serve as
22-13 custodian of the property. The custodianship is governed by this
22-14 chapter as though the representative or trustee were a donor. The
22-15 legal representative or trustee is released from responsibility for
22-16 the distributed assets on obtaining a receipt from the custodian.>
22-17 <(e) A gift under this chapter may not be made to more than
22-18 one minor, and there may be only one custodian of the gift.>
22-19 <(f) A donor who makes a gift under this chapter shall
22-20 promptly put the gift in the possession and control of the
22-21 custodian. The consummation of a gift under this chapter is not
22-22 affected by:>
22-23 <(1) the failure of the donor to deliver the gift;>
22-24 <(2) the donor's designation of an ineligible person
22-25 as custodian; or>
22-26 <(3) refusal of the custodian to serve.>
22-27 <Sec. 141.004. MANNER OF MAKING GIFT. (a) For the purpose
23-1 of this chapter, gifts are made in the manner provided by this
23-2 section.>
23-3 <(b) A donor makes a gift of a registered security by
23-4 registering it in the name of the donor, another adult person, or a
23-5 trust company followed, in substance, by: "as custodian for
23-6 (name of minor) under the Texas Uniform Gifts to Minors Act.">
23-7 <(c) A donor makes a gift of an unregistered security by
23-8 delivering to another adult person or to a trust company the
23-9 security and a statement of gift signed by the donor and the
23-10 custodian that states, in substance:>
23-11 <"GIFT UNDER THE TEXAS UNIFORM GIFTS TO MINORS ACT>
23-12 <I, (name of donor), hereby deliver to (name of custodian) as
23-13 custodian for (name of minor) under the Texas Uniform Gifts to
23-14 Minors Act, the following security(ies): (insert an appropriate
23-15 description of the security or securities delivered that is
23-16 sufficient to identify it or them)>
23-17 <(signature of donor)>
23-18 <(name of custodian) hereby acknowledges receipt of the above
23-19 described security(ies) as custodian for the above minor under the
23-20 Texas Uniform Gifts to Minors Act.>
23-21 <Dated: ___________________>
23-22 <(signature of custodian).">
23-23 <(d) A donor makes a gift of money by paying or delivering
23-24 it to a broker or a bank for credit to an account in the name of
23-25 the donor, another adult, or a bank with trust powers followed, in
23-26 substance, by: "as custodian for (name of minor) under the Texas
23-27 Uniform Gifts to Minors Act.">
24-1 <(e) A donor makes a gift of a life or endowment insurance
24-2 policy or an annuity contract by delivering the policy or contract
24-3 to the custodian after it has been assigned to the custodian, in
24-4 the custodian's name, followed, in substance, by: "as custodian
24-5 for (name of minor) under the Texas Uniform Gifts to Minors Act.">
24-6 <(f) A donor makes a gift of the proceeds of a life or
24-7 endowment insurance policy or an annuity contract by making the
24-8 proceeds payable to the custodian in the custodian's name,
24-9 followed, in substance, by: "as custodian for (name of minor)
24-10 under the Texas Uniform Gifts to Minors Act.">
24-11 <(g) A donor makes a gift of an interest in real property by
24-12 executing and delivering the appropriate conveyance of the interest
24-13 to the custodian in the custodian's name, followed, in substance,
24-14 by: "as custodian for (name of minor) under the Texas Uniform
24-15 Gifts to Minors Act.">
24-16 <(h) A donor makes a gift of an interest in tangible
24-17 personal property by transferring the property by the appropriate
24-18 document to the custodian in the custodian's name, followed, in
24-19 substance, by: "as custodian for (name of minor) under the Texas
24-20 Uniform Gifts to Minors Act.">
24-21 <(i) A donor makes a gift of property under a will or a
24-22 trust by giving the property to an adult or to a trust company
24-23 followed, in substance, by: "as custodian for (name of minor)
24-24 under the Texas Uniform Gifts to Minors Act.">
24-25 <(j) If the donor of a gift under Subsection (i) does not
24-26 designate a custodian or if the designated custodian dies or is
24-27 unable or unwilling to serve, the personal representative or
25-1 trustee shall designate a custodian from those that are eligible
25-2 under this chapter to serve as successor custodian, and the
25-3 representative or trustee shall transfer the gift to the custodian
25-4 in the form and manner provided by this chapter. The custodian's
25-5 receipt is a release and discharge for the gift.>
25-6 <(k) A personal representative may elect the procedures
25-7 under this chapter to distribute a testamentary gift.>
25-8 <Sec. 141.005. EFFECT OF GIFT. (a) A gift under this
25-9 chapter is irrevocable and indefeasibly vests legal title to the
25-10 property in the minor, but a guardian of the minor has no right,
25-11 power, duty, or authority with respect to the custodial property
25-12 except as provided in this chapter.>
25-13 <(b) A donor who makes a gift under this chapter impliedly
25-14 incorporates the provisions of this chapter in the donor's gift,
25-15 trust, or will and grants to the custodian and third persons
25-16 dealing with the custodian the powers, rights, and immunities
25-17 provided by this chapter.>
25-18 <Sec. 141.006. DUTIES AND POWERS OF CUSTODIAN. (a) A
25-19 custodian shall collect, hold, manage, invest, and reinvest the
25-20 custodial property.>
25-21 <(b) The custodian may pay to the minor or expend for the
25-22 minor's benefit as much of the custodial property as the custodian
25-23 considers advisable for the support, maintenance, education, and
25-24 benefit of the minor:>
25-25 <(1) in the manner, at the time, and to the extent the
25-26 custodian considers suitable and proper;>
25-27 <(2) without a court order;>
26-1 <(3) without regard to the duty or ability of the
26-2 custodian or another person to support the minor;>
26-3 <(4) without regard to the minor's ability to provide
26-4 support; and>
26-5 <(5) without regard to the minor's other income or
26-6 property that may be applicable to or available for the minor's
26-7 support.>
26-8 <(c) The custodian shall deliver or pay unexpended custodial
26-9 property:>
26-10 <(1) to the minor, if the minor becomes 18 years of
26-11 age or ceases to be a minor because of marriage or the general
26-12 removal of disabilities of minority; or>
26-13 <(2) to the minor's estate, if the minor dies before
26-14 becoming 18 years of age.>
26-15 <(d) Notwithstanding statutes restricting the investments of
26-16 fiduciaries, the custodian shall invest and reinvest the custodial
26-17 property as would a prudent person of discretion and intelligence
26-18 who is seeking a reasonable income and the preservation of the
26-19 person's capital, except that the custodian may retain, in the
26-20 custodian's discretion and without liability to the minor or the
26-21 minor's estate, a security given to the minor under this chapter.>
26-22 <(e) The custodian may dispose of custodial property in a
26-23 manner, when, for the price, and on the terms the custodian
26-24 considers desirable, but the custodian may only acquire as
26-25 custodial property a security, money, a life or endowment insurance
26-26 policy, an annuity contract, real property, or, if the custodian is
26-27 a trust company, an interest in one or more common trust funds
27-1 maintained by the custodian under Subchapter E, Chapter 113.>
27-2 <(f) If the issuer of a security that is custodial property
27-3 is dissolved or liquidated, the custodian may receive the minor's
27-4 share of any property resulting from the dissolution or liquidation
27-5 and retain and manage it as custodial property, but the custodian
27-6 may sell or exchange it only for property authorized to be acquired
27-7 as custodial property.>
27-8 <(g) The custodian may vote a security, insurance policy, or
27-9 annuity contract held as custodial property in person or by general
27-10 or limited proxy.>
27-11 <(h) The custodian may consent directly or through a
27-12 committee or other agent to any action by the issuer of a security
27-13 held as custodial property, including the:>
27-14 <(1) reorganization, consolidation, merger,
27-15 dissolution, or liquidation of the issuer; or>
27-16 <(2) sale, lease, pledge, or mortgage of property by
27-17 or to the issuer.>
27-18 <(i) The custodian may execute and deliver any instrument
27-19 the custodian considers advisable to carry out the custodian's
27-20 powers.>
27-21 <(j) The custodian may perform the same acts regarding
27-22 custodial real property as an unmarried adult or a trustee under
27-23 the Texas Trust Code (Chapters 111 through 115) may perform in
27-24 regard to real property.>
27-25 <(k) The custodian shall:>
27-26 <(1) register custodial securities that may be
27-27 registered in the name of the custodian followed, in substance, by:
28-1 "as custodian for (name of minor) under the Texas Uniform Gifts to
28-2 Minors Act";>
28-3 <(2) deposit custodial money with a broker or in a
28-4 bank in the name of the custodian followed, in substance, by: "as
28-5 custodian for (name of minor) under the Texas Uniform Gifts to
28-6 Minors Act"; and>
28-7 <(3) clearly identify other custodial property as
28-8 custodial property and keep the custodial property separate from
28-9 the custodian's own property.>
28-10 <(l) The custodian shall keep records of all transactions
28-11 involving custodial property and shall allow inspection of the
28-12 records at reasonable intervals by:>
28-13 <(1) a parent of the minor;>
28-14 <(2) a legal representative of the minor; or>
28-15 <(3) the minor, if the minor is 14 years of age or
28-16 older.>
28-17 <(m) The custodian has the same incidents of ownership
28-18 concerning a life or endowment insurance policy or an annuity
28-19 contract that is part of the custodial property that an owner would
28-20 have, and the custodian may use custodial property to pay premiums
28-21 on the policy or contract. If the policy or contract is on the
28-22 life of the minor, the custodian shall designate the minor's estate
28-23 as the beneficiary of the policy or contract. If the policy or
28-24 contract is on the life of a person other than the minor, the
28-25 custodian shall be the beneficiary as custodian for the minor.>
28-26 <(n) In addition to the custodian's other rights and powers
28-27 under this chapter, the custodian has as a power in trust the same
29-1 rights and powers regarding the custodial property as a guardian
29-2 has regarding noncustodial property.>
29-3 <Sec. 141.007. CUSTODIAN'S EXPENSES, COMPENSATION, BOND, AND
29-4 LIABILITIES. (a) A custodian is entitled to reimbursement from
29-5 the custodial property for reasonable expenses incurred in the
29-6 performance of the custodian's duties.>
29-7 <(b) The custodian may serve without compensation, or a
29-8 custodian who is not the donor may receive from the custodial
29-9 property a reasonable compensation for service determined, in the
29-10 following order, by:>
29-11 <(1) the instructions of the donor at the time the
29-12 gift is made;>
29-13 <(2) the statute applicable to guardians; or>
29-14 <(3) a court order.>
29-15 <(c) Except as provided by Section 141.009, the custodian is
29-16 not required to give a performance bond.>
29-17 <(d) A custodian that is not compensated for services is not
29-18 liable for a loss to the custodial property unless the loss results
29-19 from the custodian's:>
29-20 <(1) bad faith;>
29-21 <(2) intentional wrongdoing;>
29-22 <(3) gross negligence; or>
29-23 <(4) failure to maintain the standard of prudence
29-24 required by this chapter in investing the custodial property.>
29-25 <Sec. 141.008. EXEMPTION OF THIRD PERSONS FROM LIABILITY.
29-26 An issuer, transfer agent, bank, broker, or other person acting on
29-27 the instructions of or otherwise dealing with a person who purports
30-1 to be a donor or custodian under this chapter is not responsible
30-2 for:>
30-3 <(1) determining if the person designated by the donor
30-4 or acting as custodian has been duly designated;>
30-5 <(2) determining if an act of the person, including a
30-6 purchase, sale, or transfer to or by the person, is in accordance
30-7 with or authorized by this chapter;>
30-8 <(3) questioning the validity or propriety under this
30-9 chapter of an instrument or any instructions executed or given by a
30-10 person acting as donor or custodian; or>
30-11 <(4) overseeing the application by a custodian of
30-12 money or other property paid or delivered to the custodian.>
30-13 <Sec. 141.009. RESIGNATION, DEATH, OR REMOVAL OF CUSTODIAN;
30-14 BOND. (a) A custodian, including a custodian who is the donor,
30-15 may petition the court for permission to resign and for the
30-16 designation of a successor custodian.>
30-17 <(b) A donor, the legal representative of a donor, an adult
30-18 member of the minor's family, a guardian of the minor, or the minor
30-19 if the minor is 14 years of age or older may petition the court,
30-20 for cause shown in the petition, to remove the custodian and permit
30-21 the designation of a successor or alternatively to require the
30-22 custodian to give a performance bond.>
30-23 <(c) On receiving a petition under this section, the court
30-24 shall issue an order to the persons, returnable on such notice as
30-25 the court requires, to show cause why the petition should not be
30-26 granted. The court may grant the relief the court considers in the
30-27 best interest of the minor.>
31-1 <Sec. 141.010. SUCCESSOR CUSTODIAN. (a) Only an adult
31-2 member of the minor's family, a guardian of the minor, or a trust
31-3 company is eligible to serve as successor custodian.>
31-4 <(b) The successor custodian has the same rights, powers,
31-5 duties, and immunities as the original custodian.>
31-6 <(c) The successor custodian is:>
31-7 <(1) the person designated by the resigning custodian,
31-8 other than the donor, in an instrument of resignation executed by
31-9 the custodian in the presence of a subscribing witness, other than
31-10 the successor, and delivered to the minor and the successor;>
31-11 <(2) if the custodian does not effectively designate a
31-12 successor, an eligible person that is designated by the donor in a
31-13 dated instrument of designation executed by the donor in the
31-14 presence of a subscribing witness other than the successor;>
31-15 <(3) if neither the custodian nor the donor
31-16 effectively designates a successor, the minor's guardian, or if
31-17 there is no guardian but the minor is 14 years of age or older, the
31-18 person designated by the minor in the manner prescribed for the
31-19 designation of a successor;>
31-20 <(4) if the custodian, donor, or guardian does not
31-21 effectively designate a successor and the minor is less than 14
31-22 years of age:>
31-23 <(A) the person designated by a parent of the
31-24 minor; or>
31-25 <(B) if there is not a parent of the minor, the
31-26 person designated by the court on the petition of an adult member
31-27 of the minor's family.>
32-1 <(d) The designation of a successor custodian under
32-2 Subsection (c) is effective as to each item of custodial property
32-3 when the custodian resigns, dies, or becomes legally incapacitated
32-4 and the custodian or the custodian's legal representative:>
32-5 <(1) causes a registered security, life or endowment
32-6 insurance policy, annuity contract, or interest in real property to
32-7 be registered in the name of or conveyed to the successor custodian
32-8 as, in substance, "custodian for (name of minor) under the Texas
32-9 Uniform Gifts to Minors Act"; and>
32-10 <(2) delivers or causes to be delivered to the
32-11 successor custodian the other custodial property, the instrument
32-12 designating the successor custodian, and any other instrument
32-13 required for the transfer to the successor.>
32-14 <Sec. 141.011. SUPPORT OF MINOR. On the petition of a
32-15 parent or guardian of the minor or on the petition of the minor if
32-16 the minor is 14 years of age or older, the court may order the
32-17 custodian to pay to or expend for the minor as much of the
32-18 custodial property as is necessary for the minor's support,
32-19 maintenance, or education.>
32-20 <Sec. 141.012. ACCOUNTING. (a) A donor, the legal
32-21 representative of the donor, an adult member of the minor's family,
32-22 the legal representative of the minor, or the minor if the minor is
32-23 14 years of age or older may petition the court for an accounting
32-24 by the custodian or the custodian's legal representative.>
32-25 <(b) In a proceeding under this chapter or otherwise, the
32-26 court may require or permit the custodian or the custodian's legal
32-27 representative to account.>
33-1 <(c) If the court removes the custodian, the court shall:>
33-2 <(1) require an accounting;>
33-3 <(2) order delivery of the custodial property to the
33-4 successor custodian; and>
33-5 <(3) order the execution of the instruments required
33-6 for the transfer of the custodial property.>
33-7 <Sec. 141.013. CONSTRUCTION. This chapter is not the
33-8 exclusive method for making a gift to a minor.>
33-9 <Sec. 141.014. PROPERTY HELD ON AUGUST 27, 1973. (a) If a
33-10 custodian held property under this chapter on August 27, 1973, the
33-11 custodian may elect to apply this chapter with respect to the minor
33-12 and the property held at that time, along with its proceeds and
33-13 reinvestments, as though Chapter 626, Acts of the 63rd Legislature,
33-14 Regular Session, 1973 (Article 5923b, Vernon's Texas Civil
33-15 Statutes), which lowered the age of majority from age 21 to age 18,
33-16 had not been enacted.>
33-17 <(b) The custodian must notify the minor in writing of this
33-18 election, after which the custodian shall treat any reference to
33-19 the age of 18 in this chapter as a reference to the age of 21.>
33-20 <(c) The custodian may revoke any election made under this
33-21 section.>
33-22 <(d) This section expires September 1, 1995.>
33-23 SECTION 2. (a) This Act takes effect September 1, 1995, and
33-24 applies to transfers made in a manner and form prescribed by
33-25 Chapter 141, Property Code, as amended by this Act, on or after
33-26 that date.
33-27 (b) This Act applies to transfers made before the effective
34-1 date of this Act in a manner and form prescribed by Chapter 141,
34-2 Property Code, as amended by this Act, except to the extent that
34-3 the application impairs constitutionally vested rights or extends
34-4 the duration of custodianships in existence on the effective date
34-5 of this Act.
34-6 SECTION 3. The importance of this legislation and the
34-7 crowded condition of the calendars in both houses create an
34-8 emergency and an imperative public necessity that the
34-9 constitutional rule requiring bills to be read on three several
34-10 days in each house be suspended, and this rule is hereby suspended.