By Hilbert H.B. No. 2268
74R5879 CLG-F
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 a guardian, an
2-12 executor, independent executor, administrator or independent
2-13 administrator of a decedent's estate, an obligor under a benefit
2-14 plan or other governing instrument, a successor legal
2-15 representative, or a person legally authorized to perform
2-16 substantially the same functions.
2-17 (10) "Member of the minor's family" means the minor's
2-18 parent, stepparent, spouse, grandparent, brother, sister, uncle, or
2-19 aunt, whether of whole or half blood or by adoption.
2-20 (11) "Minor" means an individual who is younger than
2-21 21 years of age.
2-22 (12) "Transfer" means a transaction that creates
2-23 custodial property under Section 10.
2-24 (13) "Transferor" means a person who makes a transfer
2-25 under this chapter.
2-26 (14) "Trust company" means a financial institution,
2-27 corporation, or other legal entity authorized to exercise general
3-1 trust powers.
3-2 Sec. 3. SCOPE AND JURISDICTION. (a) This chapter applies
3-3 to a transfer that refers to the Texas Uniform Transfers to Minors
3-4 Act in the designation under Section 10(a) by which the transfer is
3-5 made if at the time of the transfer, the transferor, the minor, or
3-6 the custodian is a resident of this state or the custodial property
3-7 is located in this state. The custodianship created under Section
3-8 10 remains subject to this chapter despite a subsequent change in
3-9 residence of a transferor, the minor, or the custodian or the
3-10 removal of custodial property from this state.
3-11 (b) A person designated as custodian under this chapter is
3-12 subject to personal jurisdiction in this state with respect to any
3-13 matter relating to the custodianship.
3-14 (c) A transfer that purports to be made and that is valid
3-15 under the Uniform Transfers to Minors Act, the Uniform Gifts to
3-16 Minors Act, or a substantially similar act of another state is
3-17 governed by the law of the designated state and may be executed and
3-18 is enforceable in this state if at the time of the transfer, the
3-19 transferor, the minor, or the custodian is a resident of the
3-20 designated state or the custodial property is located in the
3-21 designated state.
3-22 Sec. 4. NOMINATION OF CUSTODIAN. (a) A person having the
3-23 right to designate the recipient of property transferable on the
3-24 occurrence of a future event may revocably nominate a custodian to
3-25 receive the property for a minor beneficiary on the occurrence of
3-26 that event by naming the custodian followed in substance by the
3-27 words: "as custodian for (name of minor) under the Texas
4-1 Uniform Transfers to Minors Act." The nomination may name one or
4-2 more persons as substitute custodians to whom the property must be
4-3 transferred, in the order named, if the first nominated custodian
4-4 dies before the transfer or is unable, declines, or is ineligible
4-5 to serve. The nomination may be made in a will, a trust, a deed,
4-6 an instrument exercising a power of appointment, or in a writing
4-7 designating a beneficiary of contractual rights that is registered
4-8 with or delivered to the payor, issuer, or other obligor of the
4-9 contractual rights.
4-10 (b) A custodian nominated under this section must be a
4-11 person to whom a transfer of property of that kind may be made
4-12 under Section 10(a).
4-13 (c) The nomination of a custodian under this section does
4-14 not create custodial property until the nominating instrument
4-15 becomes irrevocable or a transfer to the nominated custodian is
4-16 completed under Section 10. Unless the nomination of a custodian
4-17 has been revoked, the custodianship becomes effective on the
4-18 occurrence of the future event, and the custodian shall enforce a
4-19 transfer of the custodial property under Section 10.
4-20 Sec. 5. TRANSFER BY GIFT OR EXERCISE OF POWER OF
4-21 APPOINTMENT. A person may make a transfer by irrevocable gift to,
4-22 or the irrevocable exercise of a power of appointment in favor of,
4-23 a custodian for the benefit of a minor under Section 10.
4-24 Sec. 6. TRANSFER AUTHORIZED BY WILL OR TRUST. (a) A legal
4-25 representative or trustee may make an irrevocable transfer under
4-26 Section 10 to a custodian for a minor's benefit as authorized in
4-27 the governing will or trust.
5-1 (b) If the testator or settlor has nominated a custodian
5-2 under Section 4 to receive the custodial property, the transfer
5-3 must be made to that person.
5-4 (c) If the testator or settlor has not nominated a custodian
5-5 under Section 4, or all persons nominated as custodian die before
5-6 the transfer or are unable, decline, or are ineligible to serve,
5-7 the legal representative or the trustee shall designate the
5-8 custodian from among those persons eligible to serve as custodian
5-9 for property of that kind under Section 10(a).
5-10 Sec. 7. OTHER TRANSFER BY FIDUCIARY. (a) Subject to
5-11 Subsection (c), a legal representative or trustee may make an
5-12 irrevocable transfer to another adult or trust company as custodian
5-13 for a minor's benefit under Section 10 in the absence of a will or
5-14 under a will or trust that does not contain an authorization to do
5-15 so.
5-16 (b) Subject to Subsection (c), a guardian may make an
5-17 irrevocable transfer to another adult or trust company as custodian
5-18 for the minor's benefit 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, trustee, or guardian
5-22 considers the 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 recorded in the
8-9 name of the transferor, an adult other than the transferor, or a
8-10 trust company, followed in substance by the words: "as custodian
8-11 for (name of minor) under the Texas Uniform Transfers to
8-12 Minors Act";
8-13 (6) a certificate of title issued by a department or
8-14 agency of a state or of the United States that evidences title to
8-15 tangible personal property is:
8-16 (A) issued in the name of the transferor, an
8-17 adult other than the transferor, or a trust company, followed in
8-18 substance by the words: "as custodian for (name of minor)
8-19 under the Texas Uniform Transfers to Minors Act"; or
8-20 (B) delivered to an adult other than the
8-21 transferor or to a trust company, endorsed to that person
8-22 followed in substance by the words: "as a custodian
8-23 for (name of minor) under the Texas Uniform Transfers to
8-24 Minors Act"; or
8-25 (7) an interest in any property not described in
8-26 Subdivisions (1)-(6) is transferred to an adult other than the
8-27 transferor or to a trust company by a written instrument in
9-1 substantially the form set forth in Subsection (b).
9-2 (b) An instrument in the following form satisfies the
9-3 requirements of Subsections (a)(1)(B) and (7):
9-4 TRANSFER UNDER THE TEXAS
9-5 UNIFORM TRANSFERS TO MINORS ACT
9-6 I, _____________________________ (name of transferor or name
9-7 and representative capacity if a fiduciary) hereby transfer to
9-8 __________________ (name of custodian), as custodian for
9-9 _______________ (name of minor) under the Texas Uniform Transfers
9-10 to Minors Act, the following: (insert a description of the
9-11 custodial property sufficient to identify it).
9-12 Dated: ___________________
9-13 __________________________(Signature)
9-14 ____________________________ (name of custodian) acknowledges
9-15 receipt of the property described above as custodian for the minor
9-16 named above under the Texas Uniform Transfers to Minors Act.
9-17 Dated: ________________________
9-18 _______________________________
9-19 _______(Signature of Custodian)
9-20 (c) A transferor shall place the custodian in control of the
9-21 custodial property as soon as practicable.
9-22 Sec. 11. SINGLE CUSTODIANSHIP. A transfer may be made only
9-23 for one minor, and only one person may be the custodian. All
9-24 custodial property held under this chapter by the same custodian
9-25 for the benefit of the same minor constitutes a single
9-26 custodianship.
9-27 Sec. 12. VALIDITY AND EFFECT OF TRANSFER. (a) The validity
10-1 of a transfer made in a manner prescribed by this chapter is not
10-2 affected by the:
10-3 (1) transferor's failure to comply with Section 10(c)
10-4 concerning possession and control;
10-5 (2) designation of an ineligible custodian, except
10-6 designation of the transferor in the case of property for which the
10-7 transferor is ineligible to serve as custodian under Section 10(a);
10-8 or
10-9 (3) death or incapacity of a person nominated under
10-10 Section 4 or designated under Section 10 as custodian or the
10-11 disclaimer of the office by that person.
10-12 (b) A transfer made under Section 10 is irrevocable, and the
10-13 custodial property is indefeasibly vested in the minor. The
10-14 custodian has all the rights, powers, duties, and authority
10-15 provided in this chapter, and the minor or the minor's legal
10-16 representative does not have any right, power, duty, or authority
10-17 with respect to the custodial property except as provided by this
10-18 chapter.
10-19 (c) By making a transfer, the transferor incorporates all
10-20 the provisions of this chapter in the disposition and grants to the
10-21 custodian, or to any third person dealing with a person designated
10-22 as custodian, the respective powers, rights and immunities provided
10-23 by this chapter.
10-24 Sec. 13. CARE OF CUSTODIAL PROPERTY. (a) A custodian
10-25 shall:
10-26 (1) take control of custodial property;
10-27 (2) register or record title to custodial property if
11-1 appropriate; and
11-2 (3) collect, hold, manage, invest, and reinvest
11-3 custodial property.
11-4 (b) In dealing with custodial property, a custodian shall
11-5 observe the standard of care that would be observed by a prudent
11-6 person dealing with property of another and is not limited by any
11-7 other statute restricting investments by fiduciaries. If a
11-8 custodian has a special skill or expertise, the custodian shall use
11-9 that skill or expertise. However, a custodian, in the custodian's
11-10 discretion and without liability to the minor or the minor's
11-11 estate, may retain any custodial property received from a
11-12 transferor.
11-13 (c) A custodian may invest in or pay premiums on life
11-14 insurance or endowment policies on the life of:
11-15 (1) the minor only if the minor or the minor's estate
11-16 is the sole beneficiary; or
11-17 (2) another person in whom the minor has an insurable
11-18 interest only to the extent that the minor, the minor's estate, or
11-19 the custodian in the capacity of the custodian is the irrevocable
11-20 beneficiary.
11-21 (d) A custodian at all times shall keep custodial property
11-22 separate and distinct from all other property in a manner
11-23 sufficient to identify it clearly as custodial property of the
11-24 minor. Custodial property consisting of an undivided interest is
11-25 so identified if the minor's interest is held as a tenant in common
11-26 and is fixed. Custodial property subject to recordation is so
11-27 identified if it is recorded, and custodial property subject to
12-1 registration is so identified if it is registered, or held in an
12-2 account designated, in the name of the custodian followed in
12-3 substance by the words: "as custodian for ________________ (name
12-4 of minor) under the Texas Uniform Transfers to Minors Act."
12-5 (e) A custodian shall keep records of all transactions with
12-6 respect to custodial property, including information necessary for
12-7 the preparation of the minor's tax returns, and shall make the
12-8 records available for inspection at reasonable intervals by a
12-9 parent or legal representative of the minor or by the minor if the
12-10 minor is at least 14 years of age.
12-11 Sec. 14. POWERS OF CUSTODIAN. (a) A custodian, acting in a
12-12 custodial capacity, has all the rights, powers, and authority over
12-13 custodial property that unmarried adult owners have over their own
12-14 property, but a custodian may exercise those rights, powers, and
12-15 authority in that capacity only.
12-16 (b) This section does not relieve a custodian from liability
12-17 for breach of Section 13.
12-18 Sec. 15. USE OF CUSTODIAL PROPERTY. (a) A custodian may
12-19 deliver or pay to the minor or expend for the minor's benefit as
12-20 much of the custodial property as the custodian considers advisable
12-21 for the use and benefit of the minor, without court order and
12-22 without regard to:
12-23 (1) the duty or ability of the custodian personally or
12-24 of any other person to support the minor; or
12-25 (2) any other income or property of the minor that may
12-26 be applicable or available for that purpose.
12-27 (b) On petition of an interested person or the minor if the
13-1 minor is at least 14 years of age, the court may order the
13-2 custodian to deliver or pay to the minor or expend for the minor's
13-3 benefit as much of the custodial property as the court considers
13-4 advisable for the use and benefit of the minor.
13-5 (c) A delivery, payment, or expenditure under this section
13-6 is in addition to, not in substitution for, and does not affect any
13-7 obligation of a person to support the minor.
13-8 Sec. 16. CUSTODIAN'S EXPENSES, COMPENSATION, AND BOND. (a)
13-9 A custodian is entitled to reimbursement from custodial property
13-10 for reasonable expenses incurred in the performance of the
13-11 custodian's duties.
13-12 (b) Except for one who is a transferor under Section 5, a
13-13 custodian has a noncumulative election during each calendar year to
13-14 charge reasonable compensation for services performed by the
13-15 custodian during that year.
13-16 (c) Except as provided by Section 19(f), a custodian is not
13-17 required to give a bond.
13-18 Sec. 17. EXEMPTION OF THIRD PERSON FROM LIABILITY. A third
13-19 person, in good faith and without court order, may act on the
13-20 instructions of or otherwise deal with any person purporting to
13-21 make a transfer or act in the capacity of a custodian and, in the
13-22 absence of knowledge, is not responsible for determining the:
13-23 (1) validity of the purported custodian's designation;
13-24 (2) propriety of, or the authority under this chapter
13-25 for, any act of the purported custodian;
13-26 (3) validity or propriety under this chapter of any
13-27 instrument or instructions executed or given by the person
14-1 purporting to make a transfer or by the purported custodian; or
14-2 (4) propriety of the application of the minor's
14-3 property delivered to the purported custodian.
14-4 Sec. 18. LIABILITY TO THIRD PERSON. (a) A claim based on a
14-5 contract entered into by a custodian acting in a custodial
14-6 capacity, an obligation arising from the ownership or control of
14-7 custodial property, or a tort committed during the custodianship
14-8 may be asserted against the custodial property by proceeding
14-9 against the custodian in the custodian's custodial capacity,
14-10 whether or not the custodian or the minor is personally liable for
14-11 the claim.
14-12 (b) A custodian is not personally liable:
14-13 (1) on a contract properly entered into in the
14-14 custodian's custodial capacity unless the custodian fails to reveal
14-15 that capacity and to identify the custodianship in the contract; or
14-16 (2) for an obligation arising from control of
14-17 custodial property or for a tort committed during the custodianship
14-18 unless the custodian is personally at fault.
14-19 (c) A minor is not personally liable for an obligation
14-20 arising from ownership of custodial property or for a tort
14-21 committed during the custodianship unless the minor is personally
14-22 at fault.
14-23 Sec. 19. RENUNCIATION, RESIGNATION, DEATH, OR REMOVAL OF
14-24 CUSTODIAN; DESIGNATION OF SUCCESSOR CUSTODIAN. (a) A person
14-25 nominated to serve as a custodian under Section 4 or designated to
14-26 serve as a custodian under Section 10 may decline to serve as
14-27 custodian by delivering written notice to the person who made the
15-1 nomination or to the transferor's legal representative. If the
15-2 event giving rise to a transfer has not occurred and no substitute
15-3 custodian who is able, willing, and eligible to serve was nominated
15-4 under Section 4, the person who made the nomination may nominate a
15-5 substitute custodian under Section 4; otherwise the transferor or
15-6 the transferor's legal representative shall designate a substitute
15-7 custodian at the time of the transfer, in either case from among
15-8 the persons eligible to serve as custodian for that kind of
15-9 property under Section 10(a). A substitute custodian designated
15-10 under this section has the rights of a successor custodian.
15-11 (b) A custodian at any time may designate as successor
15-12 custodian a trust company or an adult other than a transferor under
15-13 Section 5 by executing and dating an instrument of designation
15-14 before a subscribing witness other than the successor. If the
15-15 instrument of designation does not contain or is not accompanied by
15-16 the custodian's resignation, the designation of the successor does
15-17 not take effect until the custodian resigns, dies, becomes
15-18 incapacitated, or is removed.
15-19 (c) A custodian may resign at any time by delivering:
15-20 (1) written notice to the successor custodian and to
15-21 the minor if the minor is at least 14 years of age; and
15-22 (2) the custodial property to the successor custodian.
15-23 (d) If a custodian is ineligible, dies, or becomes
15-24 incapacitated without having effectively designated a successor and
15-25 the minor is at least 14 years of age, the minor may designate as
15-26 successor custodian an adult member of the minor's family, a
15-27 guardian of the minor, or a trust company in the manner prescribed
16-1 by Subsection (b). If the minor is younger than 14 years of age or
16-2 fails to act within 60 days after the ineligibility, death, or
16-3 incapacity of the custodian, the minor's guardian becomes successor
16-4 custodian. If the minor has no guardian or the minor's guardian
16-5 declines to act, the transferor, the legal representative of the
16-6 transferor or of the custodian, an adult member of the minor's
16-7 family, or any other interested person may petition the court to
16-8 designate a successor custodian.
16-9 (e) As soon as practicable, a custodian who declines to
16-10 serve under Subsection (a) or resigns under Subsection (c), or the
16-11 legal representative of a deceased or incapacitated custodian,
16-12 shall put the custodial property and records in the possession and
16-13 control of the successor custodian. The successor custodian by
16-14 action may enforce the obligation to deliver custodial property and
16-15 records and becomes responsible for each item as received.
16-16 (f) A transferor, the legal representative of a transferor,
16-17 an adult member of the minor's family, a guardian of the person of
16-18 the minor, the guardian of the minor, or the minor if the minor is
16-19 at least 14 years of age may petition the court to:
16-20 (1) remove the custodian for cause and designate a
16-21 successor custodian other than a transferor under Section 5; or
16-22 (2) require the custodian to give appropriate bond.
16-23 Sec. 20. ACCOUNTING BY AND DETERMINATION OF LIABILITY. (a)
16-24 A minor who is at least 14 years of age, the minor's guardian of
16-25 the person or legal representative, an adult member of the minor's
16-26 family, a transferor, or a transferor's legal representative may
16-27 petition the court for:
17-1 (1) an accounting by the custodian or the custodian's
17-2 legal representative; or
17-3 (2) a determination of responsibility, as between the
17-4 custodial property and the custodian personally, for claims against
17-5 the custodial property unless the responsibility has been
17-6 adjudicated in an action under Section 18 to which the minor or the
17-7 minor's legal representative was a party.
17-8 (b) A successor custodian may petition the court for an
17-9 accounting by the predecessor custodian.
17-10 (c) The court, in a proceeding under this chapter or in any
17-11 other proceeding, may require or permit the custodian or the
17-12 custodian's legal representative to account.
17-13 (d) If a custodian is removed under Section 19(f), the court
17-14 shall require an accounting and order delivery of the custodial
17-15 property and records to the successor custodian and the execution
17-16 of all instruments required for transfer of the custodial property.
17-17 Sec. 21. TERMINATION OF CUSTODIANSHIP. The custodian shall
17-18 transfer in an appropriate manner the custodial property to the
17-19 minor or to the minor's estate on the earlier of the date:
17-20 (1) the minor attains 21 years of age, with respect to
17-21 custodial property transferred under Section 5 or 6;
17-22 (2) the minor attains the age of majority under the
17-23 laws of this state other than this chapter, with respect to
17-24 custodial property transferred under Section 7 or 8; or
17-25 (3) the minor's death.
17-26 Sec. 22. APPLICABILITY. This chapter applies to a transfer
17-27 within the scope of Section 3 made after September 1, 1995, if:
18-1 (1) the transfer purports to have been made under the
18-2 Texas Uniform Gifts to Minors Act; or
18-3 (2) the instrument by which the transfer purports to
18-4 have been made uses in substance the designation "as custodian
18-5 under the Uniform Gifts to Minors Act" or "as custodian under the
18-6 Uniform Transfers to Minors Act" of any other state, and the
18-7 application of this chapter is necessary to validate the transfer.
18-8 Sec. 23. EFFECT ON EXISTING CUSTODIANSHIPS. (a) Any
18-9 transfer of custodial property under this chapter made before
18-10 September 1, 1995, is validated notwithstanding that there was no
18-11 specific authority in this chapter for the coverage of custodial
18-12 property of that kind or for a transfer from that source at the
18-13 time the transfer was made.
18-14 (b) Sections 2 and 21, with respect to the age of a minor
18-15 for whom custodial property is held under this chapter, do not
18-16 apply to custodial property held in a custodianship that terminated
18-17 because the minor attained the age of 18 after August 26, 1973, and
18-18 before September 1, 1995.
18-19 Sec. 24. UNIFORMITY OF APPLICATION AND CONSTRUCTION. This
18-20 chapter shall be applied and construed to effect its general
18-21 purpose, to make uniform the law with respect to the subject of
18-22 this chapter among states enacting that law.
18-23 <SUBCHAPTER A. GENERAL PROVISIONS>
18-24 <Sec. 141.001. SHORT TITLE. This chapter may be cited as
18-25 the Texas Uniform Gifts to Minors Act.>
18-26 <Sec. 141.002. DEFINITIONS. In this chapter:>
18-27 <(1) "Adult" means an individual who is 18 years of
19-1 age or older.>
19-2 <(2) "Bank" means a state or national bank, a state or
19-3 federal savings and loan association, a federal credit union, or an
19-4 insured credit union chartered under the laws of this state.>
19-5 <(3) "Broker" means a person lawfully in the business
19-6 of effecting transactions in securities for the account of others.
19-7 The term includes a bank that effects those transactions. It also
19-8 includes a person who buys and sells securities for the person's
19-9 own account, through a broker or otherwise, as part of a regular
19-10 business.>
19-11 <(4) "Court" means a court with original probate
19-12 jurisdiction.>
19-13 <(5) "Custodial property" includes the property given
19-14 to a minor under this chapter, the income from the property, and
19-15 the direct and indirect proceeds from the disposition of the
19-16 property.>
19-17 <(6) "Custodian" means the person designated to hold
19-18 property given to a minor under this chapter.>
19-19 <(7) "Guardian" means a general guardian, guardian,
19-20 tutor, or curator of the property, estate, or person of a minor.>
19-21 <(8) "Issuer" means an individual, a firm, or a
19-22 corporation that places its name on a security, other than as
19-23 transfer agent, as evidence that the security represents a share,
19-24 right of participation, or other interest in property or an
19-25 enterprise or as evidence of a duty represented by the security,
19-26 including a substitute for the responsibilities of the issuer.>
19-27 <(9) "Legal representative" means the executor,
20-1 independent executor, administrator, independent administrator,
20-2 general guardian, guardian, committee, conservator, tutor, or
20-3 curator of a person's property or estate.>
20-4 <(10) "Life or endowment insurance policy" or "annuity
20-5 contract" means a life or endowment insurance policy or annuity
20-6 contract on the life of a minor or a member of the minor's family.>
20-7 <(11) "Member of a minor's family" means a minor's
20-8 parent, grandparent, brother, sister, aunt, or uncle, whether by
20-9 blood or adoption.>
20-10 <(12) "Minor" means an individual who is less than 18
20-11 years of age and who has never been married, except for an
20-12 individual whose disabilities of minority have been generally
20-13 removed.>
20-14 <(13) "Registered security" means a security that
20-15 identifies the owner of the security or the rights it evidences,
20-16 the transfer of which may be registered on the transfer books of
20-17 the issuer.>
20-18 <(14) "Security" means any interest or instrument
20-19 commonly known as a security, including a note, stock, treasury
20-20 stock, bond, debenture, evidence of indebtedness, collateral trust
20-21 certificate, transferable share, voting trust certificate,
20-22 investment contract, an oil, gas, or mining title or lease,
20-23 production payments under an oil, gas, or mining title or lease, as
20-24 well as a certificate of interest or participation in, a temporary
20-25 or interim receipt or certificate of deposit for, or a warrant or
20-26 right to subscribe to or purchase a security. The term does not
20-27 include an interest or instrument issued by the donor.>
21-1 <(15) "Transfer agent" means an individual, a firm, or
21-2 a corporation that is an authenticating trustee, registrar, or
21-3 other agent registering the issuance, transfer, or cancellation of
21-4 securities for an issuer.>
21-5 <(16) "Trust company" means a bank or company
21-6 authorized to exercise trust powers in this state.>
21-7 <Sec. 141.003. GIFTS TO MINORS. (a) An adult may make an
21-8 inter vivos gift under this chapter to an individual who is a minor
21-9 on the date of the gift by beneficiary designation with a company
21-10 that has issued a life or endowment insurance policy or annuity
21-11 contract.>
21-12 <(b) An adult may make an inter vivos or a testamentary gift
21-13 under this chapter to an individual who is a minor on the date of
21-14 the gift if the gift is:>
21-15 <(1) money;>
21-16 <(2) a security;>
21-17 <(3) a life or endowment insurance policy or its
21-18 proceeds;>
21-19 <(4) an annuity contract or its proceeds;>
21-20 <(5) real property; or>
21-21 <(6) tangible personal property.>
21-22 <(c) A legal representative of a decedent's estate who has
21-23 received letters of office or a trustee of a trust on behalf of a
21-24 minor who is an heir, legatee, or devisee of the decedent's estate
21-25 or a beneficiary of the trust may pay or transfer to a custodian
21-26 for the minor under this chapter or under a comparable Uniform
21-27 Gifts to Minors Act of another jurisdiction, without a court order,
22-1 property that is distributable to the minor and eligible for a gift
22-2 if:>
22-3 <(1) the representative or trustee considers the
22-4 distribution to be in the best interest of the minor; and>
22-5 <(2) the distribution is not expressly forbidden by a
22-6 will, trust agreement, court order, or other instrument governing
22-7 disposition of the property.>
22-8 <(d) A legal representative or trustee paying or
22-9 transferring property under Subsection (c) shall designate an adult
22-10 member of the minor's family or a guardian of the minor to serve as
22-11 custodian of the property. The custodianship is governed by this
22-12 chapter as though the representative or trustee were a donor. The
22-13 legal representative or trustee is released from responsibility for
22-14 the distributed assets on obtaining a receipt from the custodian.>
22-15 <(e) A gift under this chapter may not be made to more than
22-16 one minor, and there may be only one custodian of the gift.>
22-17 <(f) A donor who makes a gift under this chapter shall
22-18 promptly put the gift in the possession and control of the
22-19 custodian. The consummation of a gift under this chapter is not
22-20 affected by:>
22-21 <(1) the failure of the donor to deliver the gift;>
22-22 <(2) the donor's designation of an ineligible person
22-23 as custodian; or>
22-24 <(3) refusal of the custodian to serve.>
22-25 <Sec. 141.004. MANNER OF MAKING GIFT. (a) For the purpose
22-26 of this chapter, gifts are made in the manner provided by this
22-27 section.>
23-1 <(b) A donor makes a gift of a registered security by
23-2 registering it in the name of the donor, another adult person, or a
23-3 trust company followed, in substance, by: "as custodian for
23-4 (name of minor) under the Texas Uniform Gifts to Minors Act.">
23-5 <(c) A donor makes a gift of an unregistered security by
23-6 delivering to another adult person or to a trust company the
23-7 security and a statement of gift signed by the donor and the
23-8 custodian that states, in substance:>
23-9 <"GIFT UNDER THE TEXAS UNIFORM GIFTS TO MINORS ACT>
23-10 <I, (name of donor), hereby deliver to (name of custodian) as
23-11 custodian for (name of minor) under the Texas Uniform Gifts to
23-12 Minors Act, the following security(ies): (insert an appropriate
23-13 description of the security or securities delivered that is
23-14 sufficient to identify it or them)>
23-15 <(signature of donor)>
23-16 <(name of custodian) hereby acknowledges receipt of the above
23-17 described security(ies) as custodian for the above minor under the
23-18 Texas Uniform Gifts to Minors Act.>
23-19 <Dated: ___________________>
23-20 <(signature of custodian).">
23-21 <(d) A donor makes a gift of money by paying or delivering
23-22 it to a broker or a bank for credit to an account in the name of
23-23 the donor, another adult, or a bank with trust powers followed, in
23-24 substance, by: "as custodian for (name of minor) under the Texas
23-25 Uniform Gifts to Minors Act.">
23-26 <(e) A donor makes a gift of a life or endowment insurance
23-27 policy or an annuity contract by delivering the policy or contract
24-1 to the custodian after it has been assigned to the custodian, in
24-2 the custodian's name, followed, in substance, by: "as custodian
24-3 for (name of minor) under the Texas Uniform Gifts to Minors Act.">
24-4 <(f) A donor makes a gift of the proceeds of a life or
24-5 endowment insurance policy or an annuity contract by making the
24-6 proceeds payable to the custodian in the custodian's name,
24-7 followed, in substance, by: "as custodian for (name of minor)
24-8 under the Texas Uniform Gifts to Minors Act.">
24-9 <(g) A donor makes a gift of an interest in real property by
24-10 executing and delivering the appropriate conveyance of the interest
24-11 to the custodian in the custodian's name, followed, in substance,
24-12 by: "as custodian for (name of minor) under the Texas Uniform
24-13 Gifts to Minors Act.">
24-14 <(h) A donor makes a gift of an interest in tangible
24-15 personal property by transferring the property by the appropriate
24-16 document to the custodian in the custodian's name, followed, in
24-17 substance, by: "as custodian for (name of minor) under the Texas
24-18 Uniform Gifts to Minors Act.">
24-19 <(i) A donor makes a gift of property under a will or a
24-20 trust by giving the property to an adult or to a trust company
24-21 followed, in substance, by: "as custodian for (name of minor)
24-22 under the Texas Uniform Gifts to Minors Act.">
24-23 <(j) If the donor of a gift under Subsection (i) does not
24-24 designate a custodian or if the designated custodian dies or is
24-25 unable or unwilling to serve, the personal representative or
24-26 trustee shall designate a custodian from those that are eligible
24-27 under this chapter to serve as successor custodian, and the
25-1 representative or trustee shall transfer the gift to the custodian
25-2 in the form and manner provided by this chapter. The custodian's
25-3 receipt is a release and discharge for the gift.>
25-4 <(k) A personal representative may elect the procedures
25-5 under this chapter to distribute a testamentary gift.>
25-6 <Sec. 141.005. EFFECT OF GIFT. (a) A gift under this
25-7 chapter is irrevocable and indefeasibly vests legal title to the
25-8 property in the minor, but a guardian of the minor has no right,
25-9 power, duty, or authority with respect to the custodial property
25-10 except as provided in this chapter.>
25-11 <(b) A donor who makes a gift under this chapter impliedly
25-12 incorporates the provisions of this chapter in the donor's gift,
25-13 trust, or will and grants to the custodian and third persons
25-14 dealing with the custodian the powers, rights, and immunities
25-15 provided by this chapter.>
25-16 <Sec. 141.006. DUTIES AND POWERS OF CUSTODIAN. (a) A
25-17 custodian shall collect, hold, manage, invest, and reinvest the
25-18 custodial property.>
25-19 <(b) The custodian may pay to the minor or expend for the
25-20 minor's benefit as much of the custodial property as the custodian
25-21 considers advisable for the support, maintenance, education, and
25-22 benefit of the minor:>
25-23 <(1) in the manner, at the time, and to the extent the
25-24 custodian considers suitable and proper;>
25-25 <(2) without a court order;>
25-26 <(3) without regard to the duty or ability of the
25-27 custodian or another person to support the minor;>
26-1 <(4) without regard to the minor's ability to provide
26-2 support; and>
26-3 <(5) without regard to the minor's other income or
26-4 property that may be applicable to or available for the minor's
26-5 support.>
26-6 <(c) The custodian shall deliver or pay unexpended custodial
26-7 property:>
26-8 <(1) to the minor, if the minor becomes 18 years of
26-9 age or ceases to be a minor because of marriage or the general
26-10 removal of disabilities of minority; or>
26-11 <(2) to the minor's estate, if the minor dies before
26-12 becoming 18 years of age.>
26-13 <(d) Notwithstanding statutes restricting the investments of
26-14 fiduciaries, the custodian shall invest and reinvest the custodial
26-15 property as would a prudent person of discretion and intelligence
26-16 who is seeking a reasonable income and the preservation of the
26-17 person's capital, except that the custodian may retain, in the
26-18 custodian's discretion and without liability to the minor or the
26-19 minor's estate, a security given to the minor under this chapter.>
26-20 <(e) The custodian may dispose of custodial property in a
26-21 manner, when, for the price, and on the terms the custodian
26-22 considers desirable, but the custodian may only acquire as
26-23 custodial property a security, money, a life or endowment insurance
26-24 policy, an annuity contract, real property, or, if the custodian is
26-25 a trust company, an interest in one or more common trust funds
26-26 maintained by the custodian under Subchapter E, Chapter 113.>
26-27 <(f) If the issuer of a security that is custodial property
27-1 is dissolved or liquidated, the custodian may receive the minor's
27-2 share of any property resulting from the dissolution or liquidation
27-3 and retain and manage it as custodial property, but the custodian
27-4 may sell or exchange it only for property authorized to be acquired
27-5 as custodial property.>
27-6 <(g) The custodian may vote a security, insurance policy, or
27-7 annuity contract held as custodial property in person or by general
27-8 or limited proxy.>
27-9 <(h) The custodian may consent directly or through a
27-10 committee or other agent to any action by the issuer of a security
27-11 held as custodial property, including the:>
27-12 <(1) reorganization, consolidation, merger,
27-13 dissolution, or liquidation of the issuer; or>
27-14 <(2) sale, lease, pledge, or mortgage of property by
27-15 or to the issuer.>
27-16 <(i) The custodian may execute and deliver any instrument
27-17 the custodian considers advisable to carry out the custodian's
27-18 powers.>
27-19 <(j) The custodian may perform the same acts regarding
27-20 custodial real property as an unmarried adult or a trustee under
27-21 the Texas Trust Code (Chapters 111 through 115) may perform in
27-22 regard to real property.>
27-23 <(k) The custodian shall:>
27-24 <(1) register custodial securities that may be
27-25 registered in the name of the custodian followed, in substance, by:
27-26 "as custodian for (name of minor) under the Texas Uniform Gifts to
27-27 Minors Act";>
28-1 <(2) deposit custodial money with a broker or in a
28-2 bank in the name of the custodian followed, in substance, by: "as
28-3 custodian for (name of minor) under the Texas Uniform Gifts to
28-4 Minors Act"; and>
28-5 <(3) clearly identify other custodial property as
28-6 custodial property and keep the custodial property separate from
28-7 the custodian's own property.>
28-8 <(l) The custodian shall keep records of all transactions
28-9 involving custodial property and shall allow inspection of the
28-10 records at reasonable intervals by:>
28-11 <(1) a parent of the minor;>
28-12 <(2) a legal representative of the minor; or>
28-13 <(3) the minor, if the minor is 14 years of age or
28-14 older.>
28-15 <(m) The custodian has the same incidents of ownership
28-16 concerning a life or endowment insurance policy or an annuity
28-17 contract that is part of the custodial property that an owner would
28-18 have, and the custodian may use custodial property to pay premiums
28-19 on the policy or contract. If the policy or contract is on the
28-20 life of the minor, the custodian shall designate the minor's estate
28-21 as the beneficiary of the policy or contract. If the policy or
28-22 contract is on the life of a person other than the minor, the
28-23 custodian shall be the beneficiary as custodian for the minor.>
28-24 <(n) In addition to the custodian's other rights and powers
28-25 under this chapter, the custodian has as a power in trust the same
28-26 rights and powers regarding the custodial property as a guardian
28-27 has regarding noncustodial property.>
29-1 <Sec. 141.007. CUSTODIAN'S EXPENSES, COMPENSATION, BOND, AND
29-2 LIABILITIES. (a) A custodian is entitled to reimbursement from
29-3 the custodial property for reasonable expenses incurred in the
29-4 performance of the custodian's duties.>
29-5 <(b) The custodian may serve without compensation, or a
29-6 custodian who is not the donor may receive from the custodial
29-7 property a reasonable compensation for service determined, in the
29-8 following order, by:>
29-9 <(1) the instructions of the donor at the time the
29-10 gift is made;>
29-11 <(2) the statute applicable to guardians; or>
29-12 <(3) a court order.>
29-13 <(c) Except as provided by Section 141.009, the custodian is
29-14 not required to give a performance bond.>
29-15 <(d) A custodian that is not compensated for services is not
29-16 liable for a loss to the custodial property unless the loss results
29-17 from the custodian's:>
29-18 <(1) bad faith;>
29-19 <(2) intentional wrongdoing;>
29-20 <(3) gross negligence; or>
29-21 <(4) failure to maintain the standard of prudence
29-22 required by this chapter in investing the custodial property.>
29-23 <Sec. 141.008. EXEMPTION OF THIRD PERSONS FROM LIABILITY.
29-24 An issuer, transfer agent, bank, broker, or other person acting on
29-25 the instructions of or otherwise dealing with a person who purports
29-26 to be a donor or custodian under this chapter is not responsible
29-27 for:>
30-1 <(1) determining if the person designated by the donor
30-2 or acting as custodian has been duly designated;>
30-3 <(2) determining if an act of the person, including a
30-4 purchase, sale, or transfer to or by the person, is in accordance
30-5 with or authorized by this chapter;>
30-6 <(3) questioning the validity or propriety under this
30-7 chapter of an instrument or any instructions executed or given by a
30-8 person acting as donor or custodian; or>
30-9 <(4) overseeing the application by a custodian of
30-10 money or other property paid or delivered to the custodian.>
30-11 <Sec. 141.009. RESIGNATION, DEATH, OR REMOVAL OF CUSTODIAN;
30-12 BOND. (a) A custodian, including a custodian who is the donor,
30-13 may petition the court for permission to resign and for the
30-14 designation of a successor custodian.>
30-15 <(b) A donor, the legal representative of a donor, an adult
30-16 member of the minor's family, a guardian of the minor, or the minor
30-17 if the minor is 14 years of age or older may petition the court,
30-18 for cause shown in the petition, to remove the custodian and permit
30-19 the designation of a successor or alternatively to require the
30-20 custodian to give a performance bond.>
30-21 <(c) On receiving a petition under this section, the court
30-22 shall issue an order to the persons, returnable on such notice as
30-23 the court requires, to show cause why the petition should not be
30-24 granted. The court may grant the relief the court considers in the
30-25 best interest of the minor.>
30-26 <Sec. 141.010. SUCCESSOR CUSTODIAN. (a) Only an adult
30-27 member of the minor's family, a guardian of the minor, or a trust
31-1 company is eligible to serve as successor custodian.>
31-2 <(b) The successor custodian has the same rights, powers,
31-3 duties, and immunities as the original custodian.>
31-4 <(c) The successor custodian is:>
31-5 <(1) the person designated by the resigning custodian,
31-6 other than the donor, in an instrument of resignation executed by
31-7 the custodian in the presence of a subscribing witness, other than
31-8 the successor, and delivered to the minor and the successor;>
31-9 <(2) if the custodian does not effectively designate a
31-10 successor, an eligible person that is designated by the donor in a
31-11 dated instrument of designation executed by the donor in the
31-12 presence of a subscribing witness other than the successor;>
31-13 <(3) if neither the custodian nor the donor
31-14 effectively designates a successor, the minor's guardian, or if
31-15 there is no guardian but the minor is 14 years of age or older, the
31-16 person designated by the minor in the manner prescribed for the
31-17 designation of a successor;>
31-18 <(4) if the custodian, donor, or guardian does not
31-19 effectively designate a successor and the minor is less than 14
31-20 years of age:>
31-21 <(A) the person designated by a parent of the
31-22 minor; or>
31-23 <(B) if there is not a parent of the minor, the
31-24 person designated by the court on the petition of an adult member
31-25 of the minor's family.>
31-26 <(d) The designation of a successor custodian under
31-27 Subsection (c) is effective as to each item of custodial property
32-1 when the custodian resigns, dies, or becomes legally incapacitated
32-2 and the custodian or the custodian's legal representative:>
32-3 <(1) causes a registered security, life or endowment
32-4 insurance policy, annuity contract, or interest in real property to
32-5 be registered in the name of or conveyed to the successor custodian
32-6 as, in substance, "custodian for (name of minor) under the Texas
32-7 Uniform Gifts to Minors Act"; and>
32-8 <(2) delivers or causes to be delivered to the
32-9 successor custodian the other custodial property, the instrument
32-10 designating the successor custodian, and any other instrument
32-11 required for the transfer to the successor.>
32-12 <Sec. 141.011. SUPPORT OF MINOR. On the petition of a
32-13 parent or guardian of the minor or on the petition of the minor if
32-14 the minor is 14 years of age or older, the court may order the
32-15 custodian to pay to or expend for the minor as much of the
32-16 custodial property as is necessary for the minor's support,
32-17 maintenance, or education.>
32-18 <Sec. 141.012. ACCOUNTING. (a) A donor, the legal
32-19 representative of the donor, an adult member of the minor's family,
32-20 the legal representative of the minor, or the minor if the minor is
32-21 14 years of age or older may petition the court for an accounting
32-22 by the custodian or the custodian's legal representative.>
32-23 <(b) In a proceeding under this chapter or otherwise, the
32-24 court may require or permit the custodian or the custodian's legal
32-25 representative to account.>
32-26 <(c) If the court removes the custodian, the court shall:>
32-27 <(1) require an accounting;>
33-1 <(2) order delivery of the custodial property to the
33-2 successor custodian; and>
33-3 <(3) order the execution of the instruments required
33-4 for the transfer of the custodial property.>
33-5 <Sec. 141.013. CONSTRUCTION. This chapter is not the
33-6 exclusive method for making a gift to a minor.>
33-7 <Sec. 141.014. PROPERTY HELD ON AUGUST 27, 1973. (a) If a
33-8 custodian held property under this chapter on August 27, 1973, the
33-9 custodian may elect to apply this chapter with respect to the minor
33-10 and the property held at that time, along with its proceeds and
33-11 reinvestments, as though Chapter 626, Acts of the 63rd Legislature,
33-12 Regular Session, 1973 (Article 5923b, Vernon's Texas Civil
33-13 Statutes), which lowered the age of majority from age 21 to age 18,
33-14 had not been enacted.>
33-15 <(b) The custodian must notify the minor in writing of this
33-16 election, after which the custodian shall treat any reference to
33-17 the age of 18 in this chapter as a reference to the age of 21.>
33-18 <(c) The custodian may revoke any election made under this
33-19 section.>
33-20 <(d) This section expires September 1, 1995.>
33-21 SECTION 2. (a) This Act takes effect September 1, 1995, and
33-22 applies to transfers made in a manner and form prescribed by
33-23 Chapter 141, Property Code, as amended by this Act, on or after
33-24 that date.
33-25 (b) This Act applies to transfers made before the effective
33-26 date of this Act in a manner and form prescribed by Chapter 141,
33-27 Property Code, as amended by this Act, except to the extent that
34-1 the application impairs constitutionally vested rights or extends
34-2 the duration of custodianships in existence on the effective date
34-3 of this Act.
34-4 SECTION 3. The importance of this legislation and the
34-5 crowded condition of the calendars in both houses create an
34-6 emergency and an imperative public necessity that the
34-7 constitutional rule requiring bills to be read on three several
34-8 days in each house be suspended, and this rule is hereby suspended.