1-1 By: Hilbert (Senate Sponsor - Whitmire) H.B. No. 2268
1-2 (In the Senate - Received from the House May 4, 1995;
1-3 May 5, 1995, read first time and referred to Committee on
1-4 Jurisprudence; May 9, 1995, reported favorably by the following
1-5 vote: Yeas 6, Nays 0; May 9, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the adoption of the Texas Uniform Transfers to Minors
1-9 Act.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Chapter 141, Property Code, is amended to read as
1-12 follows:
1-13 Sec. 1. SHORT TITLE. This chapter may be cited as the Texas
1-14 Uniform Transfers to Minors Act.
1-15 Sec. 2. DEFINITIONS. In this chapter:
1-16 (1) "Adult" means an individual who is at least 21
1-17 years of age.
1-18 (2) "Benefit plan" means an employer's plan for the
1-19 benefit of an employee or partner or an individual retirement
1-20 account.
1-21 (3) "Broker" means a person lawfully engaged in the
1-22 business of effecting transactions in securities or commodities for
1-23 the person's own account or for the account of another.
1-24 (4) "Court" means a court with original probate
1-25 jurisdiction.
1-26 (5) "Custodial property" means:
1-27 (A) any interest in property transferred to a
1-28 custodian under this chapter; and
1-29 (B) the income from and proceeds of that
1-30 interest in property.
1-31 (6) "Custodian" means a person designated as a
1-32 custodian under Section 10 or a successor or substitute custodian
1-33 designated under Section 19.
1-34 (7) "Financial institution" means a bank, trust
1-35 company, savings institution, or credit union chartered and
1-36 supervised under state or federal law.
1-37 (8) "Guardian" means a person appointed or qualified
1-38 by a court to act as general, limited, or temporary guardian of a
1-39 minor's property or a person legally authorized to perform
1-40 substantially the same functions.
1-41 (9) "Legal representative" means an executor,
1-42 independent executor, administrator or independent administrator of
1-43 a decedent's estate, an obligor under a benefit plan or other
1-44 governing instrument, a successor legal representative, or a person
1-45 legally authorized to perform substantially the same functions.
1-46 (10) "Member of the minor's family" means the minor's
1-47 parent, stepparent, spouse, grandparent, brother, sister, uncle, or
1-48 aunt, whether of whole or half blood or by adoption.
1-49 (11) "Minor" means an individual who is younger than
1-50 21 years of age.
1-51 (12) "Transfer" means a transaction that creates
1-52 custodial property under Section 10.
1-53 (13) "Transferor" means a person who makes a transfer
1-54 under this chapter.
1-55 (14) "Trust company" means a financial institution,
1-56 corporation, or other legal entity authorized to exercise general
1-57 trust powers.
1-58 Sec. 3. SCOPE AND JURISDICTION. (a) This chapter applies
1-59 to a transfer that refers to the Texas Uniform Transfers to Minors
1-60 Act in the designation under Section 10(a) by which the transfer is
1-61 made if at the time of the transfer, the transferor, the minor, or
1-62 the custodian is a resident of this state or the custodial property
1-63 is located in this state. The custodianship created under Section
1-64 10 remains subject to this chapter despite a subsequent change in
1-65 residence of a transferor, the minor, or the custodian or the
1-66 removal of custodial property from this state.
1-67 (b) A person designated as custodian under this chapter is
1-68 subject to personal jurisdiction in this state with respect to any
2-1 matter relating to the custodianship.
2-2 (c) A transfer that purports to be made and that is valid
2-3 under the Uniform Transfers to Minors Act, the Uniform Gifts to
2-4 Minors Act, or a substantially similar act of another state is
2-5 governed by the law of the designated state and may be executed and
2-6 is enforceable in this state if at the time of the transfer, the
2-7 transferor, the minor, or the custodian is a resident of the
2-8 designated state or the custodial property is located in the
2-9 designated state.
2-10 Sec. 4. NOMINATION OF CUSTODIAN. (a) A person having the
2-11 right to designate the recipient of property transferable on the
2-12 occurrence of a future event may revocably nominate a custodian to
2-13 receive the property for a minor beneficiary on the occurrence of
2-14 that event by naming the custodian followed in substance by the
2-15 words: "as custodian for (name of minor) under the Texas
2-16 Uniform Transfers to Minors Act." The nomination may name one or
2-17 more persons as substitute custodians to whom the property must be
2-18 transferred, in the order named, if the first nominated custodian
2-19 dies before the transfer or is unable, declines, or is ineligible
2-20 to serve. The nomination may be made in a will, a trust, a deed,
2-21 an instrument exercising a power of appointment, or in a writing
2-22 designating a beneficiary of contractual rights that is registered
2-23 with or delivered to the payor, issuer, or other obligor of the
2-24 contractual rights.
2-25 (b) A custodian nominated under this section must be a
2-26 person to whom a transfer of property of that kind may be made
2-27 under Section 10(a).
2-28 (c) The nomination of a custodian under this section does
2-29 not create custodial property until the nominating instrument
2-30 becomes irrevocable or a transfer to the nominated custodian is
2-31 completed under Section 10. Unless the nomination of a custodian
2-32 has been revoked, the custodianship becomes effective on the
2-33 occurrence of the future event, and the custodian shall enforce a
2-34 transfer of the custodial property under Section 10.
2-35 Sec. 5. TRANSFER BY GIFT OR EXERCISE OF POWER OF
2-36 APPOINTMENT. A person may make a transfer by irrevocable gift to,
2-37 or the irrevocable exercise of a power of appointment in favor of,
2-38 a custodian for the benefit of a minor under Section 10.
2-39 Sec. 6. TRANSFER AUTHORIZED BY WILL OR TRUST. (a) A legal
2-40 representative or trustee may make an irrevocable transfer under
2-41 Section 10 to a custodian for a minor's benefit as authorized in
2-42 the governing will or trust.
2-43 (b) If the testator or settlor has nominated a custodian
2-44 under Section 4 to receive the custodial property, the transfer
2-45 must be made to that person.
2-46 (c) If the testator or settlor has not nominated a custodian
2-47 under Section 4, or all persons nominated as custodian die before
2-48 the transfer or are unable, decline, or are ineligible to serve,
2-49 the legal representative or the trustee shall designate the
2-50 custodian from among those persons eligible to serve as custodian
2-51 for property of that kind under Section 10(a).
2-52 Sec. 7. OTHER TRANSFER BY FIDUCIARY. (a) Subject to
2-53 Subsections (b) and (c), a guardian, legal representative, or
2-54 trustee may make an irrevocable transfer to another adult or trust
2-55 company as custodian for a minor's benefit under Section 10 in the
2-56 absence of a will or under a will or trust that does not contain an
2-57 authorization to do so.
2-58 (b) With the approval of the court supervising the
2-59 guardianship, a guardian may make an irrevocable transfer to
2-60 another adult or trust company as custodian for the minor's benefit
2-61 under Section 10.
2-62 (c) A transfer under Subsection (a) or (b) may be made only
2-63 if:
2-64 (1) the legal representative or trustee considers the
2-65 transfer to be in the best interest of the minor;
2-66 (2) the transfer is not prohibited by or inconsistent
2-67 with provisions of the applicable will, trust agreement, or other
2-68 governing instrument; and
2-69 (3) the transfer is authorized by the court if it
2-70 exceeds $10,000 in value.
3-1 Sec. 8. TRANSFER BY OBLIGOR. (a) Subject to Subsections
3-2 (b) and (c), a person who is not subject to Section 6 or 7 and who
3-3 holds property of or owes a liquidated debt to a minor who does not
3-4 have a guardian may make an irrevocable transfer to a custodian for
3-5 the benefit of the minor under Section 10.
3-6 (b) If a person who has the right to nominate a custodian
3-7 under Section 4 has nominated a custodian under that section to
3-8 receive the custodial property, the transfer must be made to that
3-9 person.
3-10 (c) If a custodian has not been nominated under Section 4,
3-11 or all persons nominated as custodian die before the transfer or
3-12 are unable, decline, or are ineligible to serve, a transfer under
3-13 this section may be made to an adult member of the minor's family
3-14 or to a trust company unless the property exceeds $10,000 in value.
3-15 Sec. 9. RECEIPT FOR CUSTODIAL PROPERTY. A written
3-16 acknowledgment of delivery by a custodian constitutes a sufficient
3-17 receipt and discharge for custodial property transferred to the
3-18 custodian under this chapter.
3-19 Sec. 10. MANNER OF CREATING CUSTODIAL PROPERTY AND EFFECTING
3-20 TRANSFER; DESIGNATION OF INITIAL CUSTODIAN; CONTROL. (a)
3-21 Custodial property is created and a transfer is made when:
3-22 (1) an uncertificated security or a certificated
3-23 security in registered form is:
3-24 (A) registered in the name of the
3-25 transferor, an adult other than the transferor, or a trust
3-26 company, followed in substance by the words: "as custodian
3-27 for (name of minor) under the Texas Uniform Transfers to
3-28 Minors Act"; or
3-29 (B) delivered if in certificated form, or any
3-30 document necessary for the transfer of an uncertificated security
3-31 is delivered, with any necessary endorsement to an adult other than
3-32 the transferor or to a trust company as custodian, accompanied by
3-33 an instrument in substantially the form set forth in Subsection
3-34 (b);
3-35 (2) money is paid or delivered, or a security held in
3-36 the name of a broker, financial institution, or its nominee is
3-37 transferred, to a broker or financial institution for credit to an
3-38 account in the name of the transferor, an adult other than the
3-39 transferor, or a trust company, followed in substance by the words:
3-40 "as custodian for (name of minor) under the Texas Uniform
3-41 Transfers to Minors Act";
3-42 (3) the ownership of a life or endowment insurance
3-43 policy or annuity contract is:
3-44 (A) registered with the issuer in the name of
3-45 the transferor, an adult other than the transferor, or a trust
3-46 company, followed in substance by the words: "as custodian for
3-47 (name of minor) under the Texas Uniform Transfers to Minors
3-48 Act"; or
3-49 (B) assigned in a writing delivered to an adult
3-50 other than the transferor or to a trust company whose name in the
3-51 assignment is followed in substance by the words: "as custodian
3-52 for (name of minor) under the Texas Uniform Transfers to
3-53 Minors Act";
3-54 (4) an irrevocable exercise of a power of appointment
3-55 or an irrevocable present right to future payment under a contract
3-56 is the subject of a written notification delivered to the payor,
3-57 issuer, or other obligor that the right is transferred to the
3-58 transferor, an adult other than the transferor, or a trust company,
3-59 whose name in the notification is followed in substance by the
3-60 words: "as custodian for (name of minor) under the Texas
3-61 Uniform Transfers to Minors Act";
3-62 (5) an interest in real property is conveyed by
3-63 instrument recorded in the real property records in the
3-64 county in which the real property is located to the
3-65 transferor, an adult other than the transferor, or a trust
3-66 company, followed in substance by the words: "as
3-67 custodian for (name of minor) under the Texas Uniform
3-68 Transfers to Minors Act";
3-69 (6) a certificate of title issued by a department or
3-70 agency of a state or of the United States that evidences title to
4-1 tangible personal property is:
4-2 (A) issued in the name of the transferor, an
4-3 adult other than the transferor, or a trust company, followed in
4-4 substance by the words: "as custodian for (name of minor)
4-5 under the Texas Uniform Transfers to Minors Act"; or
4-6 (B) delivered to an adult other than the
4-7 transferor or to a trust company, endorsed to that person
4-8 followed in substance by the words: "as a custodian
4-9 for (name of minor) under the Texas Uniform Transfers to
4-10 Minors Act"; or
4-11 (7) an interest in any property not described in
4-12 Subdivisions (1)-(6) is transferred to an adult other than the
4-13 transferor or to a trust company by a written instrument in
4-14 substantially the form set forth in Subsection (b).
4-15 (b) An instrument in the following form satisfies the
4-16 requirements of Subsections (a)(1)(B) and (7):
4-17 TRANSFER UNDER THE TEXAS
4-18 UNIFORM TRANSFERS TO MINORS ACT
4-19 I, _____________________________ (name of transferor or name
4-20 and representative capacity if a fiduciary) hereby transfer to
4-21 __________________ (name of custodian), as custodian for
4-22 _______________ (name of minor) under the Texas Uniform Transfers
4-23 to Minors Act, the following: (insert a description of the
4-24 custodial property sufficient to identify it).
4-25 Dated: ___________________
4-26 __________________________(Signature)
4-27 ____________________________ (name of custodian) acknowledges
4-28 receipt of the property described above as custodian for the minor
4-29 named above under the Texas Uniform Transfers to Minors Act.
4-30 Dated: ________________________
4-31 _______________________________
4-32 _______(Signature of Custodian)
4-33 (c) A transferor shall place the custodian in control of the
4-34 custodial property as soon as practicable.
4-35 Sec. 11. SINGLE CUSTODIANSHIP. A transfer may be made only
4-36 for one minor, and only one person may be the custodian. All
4-37 custodial property held under this chapter by the same custodian
4-38 for the benefit of the same minor constitutes a single
4-39 custodianship.
4-40 Sec. 12. VALIDITY AND EFFECT OF TRANSFER. (a) The validity
4-41 of a transfer made in a manner prescribed by this chapter is not
4-42 affected by the:
4-43 (1) transferor's failure to comply with Section 10(c)
4-44 concerning possession and control;
4-45 (2) designation of an ineligible custodian, except
4-46 designation of the transferor in the case of property for which the
4-47 transferor is ineligible to serve as custodian under Section 10(a);
4-48 or
4-49 (3) death or incapacity of a person nominated under
4-50 Section 4 or designated under Section 10 as custodian or the
4-51 disclaimer of the office by that person.
4-52 (b) A transfer made under Section 10 is irrevocable, and the
4-53 custodial property is indefeasibly vested in the minor. The
4-54 custodian has all the rights, powers, duties, and authority
4-55 provided in this chapter, and the minor or the minor's legal
4-56 representative does not have any right, power, duty, or authority
4-57 with respect to the custodial property except as provided by this
4-58 chapter.
4-59 (c) By making a transfer, the transferor incorporates all
4-60 the provisions of this chapter in the disposition and grants to the
4-61 custodian, or to any third person dealing with a person designated
4-62 as custodian, the respective powers, rights and immunities provided
4-63 by this chapter.
4-64 Sec. 13. CARE OF CUSTODIAL PROPERTY. (a) A custodian
4-65 shall:
4-66 (1) take control of custodial property;
4-67 (2) register or record title to custodial property if
4-68 appropriate; and
4-69 (3) collect, hold, manage, sell, convey, invest, and
4-70 reinvest custodial property.
5-1 (b) In dealing with custodial property, a custodian shall
5-2 observe the standard of care that would be observed by a prudent
5-3 person dealing with property of another and is not limited by any
5-4 other statute restricting investments by fiduciaries. If a
5-5 custodian has a special skill or expertise, the custodian shall use
5-6 that skill or expertise. However, a custodian, in the custodian's
5-7 discretion and without liability to the minor or the minor's
5-8 estate, may retain any custodial property received from a
5-9 transferor.
5-10 (c) A custodian may invest in or pay premiums on life
5-11 insurance or endowment policies on the life of:
5-12 (1) the minor only if the minor or the minor's estate
5-13 is the sole beneficiary; or
5-14 (2) another person in whom the minor has an insurable
5-15 interest only to the extent that the minor, the minor's estate, or
5-16 the custodian in the capacity of the custodian is the irrevocable
5-17 beneficiary.
5-18 (d) A custodian at all times shall keep custodial property
5-19 separate and distinct from all other property in a manner
5-20 sufficient to identify it clearly as custodial property of the
5-21 minor. Custodial property consisting of an undivided interest is
5-22 so identified if the minor's interest is held as a tenant in common
5-23 and is fixed. Custodial property subject to recordation is so
5-24 identified if it is recorded, and custodial property subject to
5-25 registration is so identified if it is registered, or held in an
5-26 account designated, in the name of the custodian followed in
5-27 substance by the words: "as custodian for ________________ (name
5-28 of minor) under the Texas Uniform Transfers to Minors Act."
5-29 (e) A custodian shall keep records of all transactions with
5-30 respect to custodial property, including information necessary for
5-31 the preparation of the minor's tax returns, and shall make the
5-32 records available for inspection at reasonable intervals by a
5-33 parent or legal representative of the minor or by the minor if the
5-34 minor is at least 14 years of age.
5-35 Sec. 14. POWERS OF CUSTODIAN. (a) A custodian, acting in a
5-36 custodial capacity, has all the rights, powers, and authority over
5-37 custodial property that unmarried adult owners have over their own
5-38 property, but a custodian may exercise those rights, powers, and
5-39 authority in that capacity only.
5-40 (b) This section does not relieve a custodian from liability
5-41 for breach of Section 13.
5-42 Sec. 15. USE OF CUSTODIAL PROPERTY. (a) A custodian may
5-43 deliver or pay to the minor or expend for the minor's benefit as
5-44 much of the custodial property as the custodian considers advisable
5-45 for the use and benefit of the minor, without court order and
5-46 without regard to:
5-47 (1) the duty or ability of the custodian personally or
5-48 of any other person to support the minor; or
5-49 (2) any other income or property of the minor that may
5-50 be applicable or available for that purpose.
5-51 (b) On petition of an interested person or the minor if the
5-52 minor is at least 14 years of age, the court may order the
5-53 custodian to deliver or pay to the minor or expend for the minor's
5-54 benefit as much of the custodial property as the court considers
5-55 advisable for the use and benefit of the minor.
5-56 (c) A delivery, payment, or expenditure under this section
5-57 is in addition to, not in substitution for, and does not affect any
5-58 obligation of a person to support the minor.
5-59 Sec. 16. CUSTODIAN'S EXPENSES, COMPENSATION, AND BOND. (a)
5-60 A custodian is entitled to reimbursement from custodial property
5-61 for reasonable expenses incurred in the performance of the
5-62 custodian's duties.
5-63 (b) Except for one who is a transferor under Section 5, a
5-64 custodian has a noncumulative election during each calendar year to
5-65 charge reasonable compensation for services performed by the
5-66 custodian during that year.
5-67 (c) Except as provided by Section 19(f), a custodian is not
5-68 required to give a bond.
5-69 Sec. 17. EXEMPTION OF THIRD PERSON FROM LIABILITY. A third
5-70 person, in good faith and without court order, may act on the
6-1 instructions of or otherwise deal with any person purporting to
6-2 make a transfer or act in the capacity of a custodian and, in the
6-3 absence of knowledge, is not responsible for determining the:
6-4 (1) validity of the purported custodian's designation;
6-5 (2) propriety of, or the authority under this chapter
6-6 for, any act of the purported custodian;
6-7 (3) validity or propriety under this chapter of any
6-8 instrument or instructions executed or given by the person
6-9 purporting to make a transfer or by the purported custodian; or
6-10 (4) propriety of the application of the minor's
6-11 property delivered to the purported custodian.
6-12 Sec. 18. LIABILITY TO THIRD PERSON. (a) A claim based on a
6-13 contract entered into by a custodian acting in a custodial
6-14 capacity, an obligation arising from the ownership or control of
6-15 custodial property, or a tort committed during the custodianship
6-16 may be asserted against the custodial property by proceeding
6-17 against the custodian in the custodian's custodial capacity,
6-18 whether or not the custodian or the minor is personally liable for
6-19 the claim.
6-20 (b) A custodian is not personally liable:
6-21 (1) on a contract properly entered into in the
6-22 custodian's custodial capacity unless the custodian fails to reveal
6-23 that capacity and to identify the custodianship in the contract; or
6-24 (2) for an obligation arising from control of
6-25 custodial property or for a tort committed during the custodianship
6-26 unless the custodian is personally at fault.
6-27 (c) A minor is not personally liable for an obligation
6-28 arising from ownership of custodial property or for a tort
6-29 committed during the custodianship unless the minor is personally
6-30 at fault.
6-31 Sec. 19. RENUNCIATION, RESIGNATION, DEATH, OR REMOVAL OF
6-32 CUSTODIAN; DESIGNATION OF SUCCESSOR CUSTODIAN. (a) A person
6-33 nominated to serve as a custodian under Section 4 or designated to
6-34 serve as a custodian under Section 10 may decline to serve as
6-35 custodian by delivering written notice to the person who made the
6-36 nomination or to the transferor's legal representative. If the
6-37 event giving rise to a transfer has not occurred and no substitute
6-38 custodian who is able, willing, and eligible to serve was nominated
6-39 under Section 4, the person who made the nomination may nominate a
6-40 substitute custodian under Section 4; otherwise the transferor or
6-41 the transferor's legal representative shall designate a substitute
6-42 custodian at the time of the transfer, in either case from among
6-43 the persons eligible to serve as custodian for that kind of
6-44 property under Section 10(a). A substitute custodian designated
6-45 under this section has the rights of a successor custodian.
6-46 (b) A custodian at any time may designate as successor
6-47 custodian a trust company or an adult other than a transferor under
6-48 Section 5 by executing and dating an instrument of designation
6-49 before a subscribing witness other than the successor. If the
6-50 instrument of designation does not contain or is not accompanied by
6-51 the custodian's resignation, the designation of the successor does
6-52 not take effect until the custodian resigns, dies, becomes
6-53 incapacitated, or is removed.
6-54 (c) A custodian may resign at any time by delivering:
6-55 (1) written notice to the successor custodian and to
6-56 the minor if the minor is at least 14 years of age; and
6-57 (2) the custodial property to the successor custodian.
6-58 (d) If a custodian is ineligible, dies, or becomes
6-59 incapacitated without having effectively designated a successor and
6-60 the minor is at least 14 years of age, the minor may designate as
6-61 successor custodian an adult member of the minor's family, a
6-62 guardian of the minor, or a trust company in the manner prescribed
6-63 by Subsection (b). If the minor is younger than 14 years of age or
6-64 fails to act within 60 days after the ineligibility, death, or
6-65 incapacity of the custodian, the minor's guardian becomes successor
6-66 custodian. If the minor has no guardian or the minor's guardian
6-67 declines to act, the transferor, the legal representative of the
6-68 transferor or of the custodian, an adult member of the minor's
6-69 family, or any other interested person may petition the court to
6-70 designate a successor custodian.
7-1 (e) As soon as practicable, a custodian who declines to
7-2 serve under Subsection (a) or resigns under Subsection (c), or the
7-3 legal representative of a deceased or incapacitated custodian,
7-4 shall put the custodial property and records in the possession and
7-5 control of the successor custodian. The successor custodian by
7-6 action may enforce the obligation to deliver custodial property and
7-7 records and becomes responsible for each item as received.
7-8 (f) A transferor, the legal representative of a transferor,
7-9 an adult member of the minor's family, a guardian of the person of
7-10 the minor, the guardian of the minor, or the minor if the minor is
7-11 at least 14 years of age may petition the court to:
7-12 (1) remove the custodian for cause and designate a
7-13 successor custodian other than a transferor under Section 5; or
7-14 (2) require the custodian to give appropriate bond.
7-15 Sec. 20. ACCOUNTING BY AND DETERMINATION OF LIABILITY. (a)
7-16 A minor who is at least 14 years of age, the minor's guardian of
7-17 the person or legal representative, an adult member of the minor's
7-18 family, a transferor, or a transferor's legal representative may
7-19 petition the court for:
7-20 (1) an accounting by the custodian or the custodian's
7-21 legal representative; or
7-22 (2) a determination of responsibility, as between the
7-23 custodial property and the custodian personally, for claims against
7-24 the custodial property unless the responsibility has been
7-25 adjudicated in an action under Section 18 to which the minor or the
7-26 minor's legal representative was a party.
7-27 (b) A successor custodian may petition the court for an
7-28 accounting by the predecessor custodian.
7-29 (c) The court, in a proceeding under this chapter or in any
7-30 other proceeding, may require or permit the custodian or the
7-31 custodian's legal representative to account.
7-32 (d) If a custodian is removed under Section 19(f), the court
7-33 shall require an accounting and order delivery of the custodial
7-34 property and records to the successor custodian and the execution
7-35 of all instruments required for transfer of the custodial property.
7-36 Sec. 21. TERMINATION OF CUSTODIANSHIP. The custodian shall
7-37 transfer in an appropriate manner the custodial property to the
7-38 minor or to the minor's estate on the earlier of the date:
7-39 (1) the minor attains 21 years of age, with respect to
7-40 custodial property transferred under Section 5 or 6;
7-41 (2) the minor attains the age of majority under the
7-42 laws of this state other than this chapter, with respect to
7-43 custodial property transferred under Section 7 or 8; or
7-44 (3) the minor's death.
7-45 Sec. 22. APPLICABILITY. This chapter applies to a transfer
7-46 within the scope of Section 3 made after September 1, 1995, if:
7-47 (1) the transfer purports to have been made under the
7-48 Texas Uniform Gifts to Minors Act; or
7-49 (2) the instrument by which the transfer purports to
7-50 have been made uses in substance the designation "as custodian
7-51 under the Uniform Gifts to Minors Act" or "as custodian under the
7-52 Uniform Transfers to Minors Act" of any other state, and the
7-53 application of this chapter is necessary to validate the transfer.
7-54 Sec. 23. EFFECT ON EXISTING CUSTODIANSHIPS. (a) Any
7-55 transfer of custodial property under this chapter made before
7-56 September 1, 1995, is validated notwithstanding that there was no
7-57 specific authority in this chapter for the coverage of custodial
7-58 property of that kind or for a transfer from that source at the
7-59 time the transfer was made.
7-60 (b) Sections 2 and 21, with respect to the age of a minor
7-61 for whom custodial property is held under this chapter, do not
7-62 apply to custodial property held in a custodianship that terminated
7-63 because the minor attained the age of 18 after August 26, 1973, and
7-64 before September 1, 1995.
7-65 Sec. 24. UNIFORMITY OF APPLICATION AND CONSTRUCTION. This
7-66 chapter shall be applied and construed to effect its general
7-67 purpose, to make uniform the law with respect to the subject of
7-68 this chapter among states enacting that law.
7-69 <SUBCHAPTER A. GENERAL PROVISIONS>
7-70 <Sec. 141.001. SHORT TITLE. This chapter may be cited as
8-1 the Texas Uniform Gifts to Minors Act.>
8-2 <Sec. 141.002. DEFINITIONS. In this chapter:>
8-3 <(1) "Adult" means an individual who is 18 years of
8-4 age or older.>
8-5 <(2) "Bank" means a state or national bank, a state or
8-6 federal savings and loan association, a federal credit union, or an
8-7 insured credit union chartered under the laws of this state.>
8-8 <(3) "Broker" means a person lawfully in the business
8-9 of effecting transactions in securities for the account of others.
8-10 The term includes a bank that effects those transactions. It also
8-11 includes a person who buys and sells securities for the person's
8-12 own account, through a broker or otherwise, as part of a regular
8-13 business.>
8-14 <(4) "Court" means a court with original probate
8-15 jurisdiction.>
8-16 <(5) "Custodial property" includes the property given
8-17 to a minor under this chapter, the income from the property, and
8-18 the direct and indirect proceeds from the disposition of the
8-19 property.>
8-20 <(6) "Custodian" means the person designated to hold
8-21 property given to a minor under this chapter.>
8-22 <(7) "Guardian" means a general guardian, guardian,
8-23 tutor, or curator of the property, estate, or person of a minor.>
8-24 <(8) "Issuer" means an individual, a firm, or a
8-25 corporation that places its name on a security, other than as
8-26 transfer agent, as evidence that the security represents a share,
8-27 right of participation, or other interest in property or an
8-28 enterprise or as evidence of a duty represented by the security,
8-29 including a substitute for the responsibilities of the issuer.>
8-30 <(9) "Legal representative" means the executor,
8-31 independent executor, administrator, independent administrator,
8-32 general guardian, guardian, committee, conservator, tutor, or
8-33 curator of a person's property or estate.>
8-34 <(10) "Life or endowment insurance policy" or "annuity
8-35 contract" means a life or endowment insurance policy or annuity
8-36 contract on the life of a minor or a member of the minor's family.>
8-37 <(11) "Member of a minor's family" means a minor's
8-38 parent, grandparent, brother, sister, aunt, or uncle, whether by
8-39 blood or adoption.>
8-40 <(12) "Minor" means an individual who is less than 18
8-41 years of age and who has never been married, except for an
8-42 individual whose disabilities of minority have been generally
8-43 removed.>
8-44 <(13) "Registered security" means a security that
8-45 identifies the owner of the security or the rights it evidences,
8-46 the transfer of which may be registered on the transfer books of
8-47 the issuer.>
8-48 <(14) "Security" means any interest or instrument
8-49 commonly known as a security, including a note, stock, treasury
8-50 stock, bond, debenture, evidence of indebtedness, collateral trust
8-51 certificate, transferable share, voting trust certificate,
8-52 investment contract, an oil, gas, or mining title or lease,
8-53 production payments under an oil, gas, or mining title or lease, as
8-54 well as a certificate of interest or participation in, a temporary
8-55 or interim receipt or certificate of deposit for, or a warrant or
8-56 right to subscribe to or purchase a security. The term does not
8-57 include an interest or instrument issued by the donor.>
8-58 <(15) "Transfer agent" means an individual, a firm, or
8-59 a corporation that is an authenticating trustee, registrar, or
8-60 other agent registering the issuance, transfer, or cancellation of
8-61 securities for an issuer.>
8-62 <(16) "Trust company" means a bank or company
8-63 authorized to exercise trust powers in this state.>
8-64 <Sec. 141.003. GIFTS TO MINORS. (a) An adult may make an
8-65 inter vivos gift under this chapter to an individual who is a minor
8-66 on the date of the gift by beneficiary designation with a company
8-67 that has issued a life or endowment insurance policy or annuity
8-68 contract.>
8-69 <(b) An adult may make an inter vivos or a testamentary gift
8-70 under this chapter to an individual who is a minor on the date of
9-1 the gift if the gift is:>
9-2 <(1) money;>
9-3 <(2) a security;>
9-4 <(3) a life or endowment insurance policy or its
9-5 proceeds;>
9-6 <(4) an annuity contract or its proceeds;>
9-7 <(5) real property; or>
9-8 <(6) tangible personal property.>
9-9 <(c) A legal representative of a decedent's estate who has
9-10 received letters of office or a trustee of a trust on behalf of a
9-11 minor who is an heir, legatee, or devisee of the decedent's estate
9-12 or a beneficiary of the trust may pay or transfer to a custodian
9-13 for the minor under this chapter or under a comparable Uniform
9-14 Gifts to Minors Act of another jurisdiction, without a court order,
9-15 property that is distributable to the minor and eligible for a gift
9-16 if:>
9-17 <(1) the representative or trustee considers the
9-18 distribution to be in the best interest of the minor; and>
9-19 <(2) the distribution is not expressly forbidden by a
9-20 will, trust agreement, court order, or other instrument governing
9-21 disposition of the property.>
9-22 <(d) A legal representative or trustee paying or
9-23 transferring property under Subsection (c) shall designate an adult
9-24 member of the minor's family or a guardian of the minor to serve as
9-25 custodian of the property. The custodianship is governed by this
9-26 chapter as though the representative or trustee were a donor. The
9-27 legal representative or trustee is released from responsibility for
9-28 the distributed assets on obtaining a receipt from the custodian.>
9-29 <(e) A gift under this chapter may not be made to more than
9-30 one minor, and there may be only one custodian of the gift.>
9-31 <(f) A donor who makes a gift under this chapter shall
9-32 promptly put the gift in the possession and control of the
9-33 custodian. The consummation of a gift under this chapter is not
9-34 affected by:>
9-35 <(1) the failure of the donor to deliver the gift;>
9-36 <(2) the donor's designation of an ineligible person
9-37 as custodian; or>
9-38 <(3) refusal of the custodian to serve.>
9-39 <Sec. 141.004. MANNER OF MAKING GIFT. (a) For the purpose
9-40 of this chapter, gifts are made in the manner provided by this
9-41 section.>
9-42 <(b) A donor makes a gift of a registered security by
9-43 registering it in the name of the donor, another adult person, or a
9-44 trust company followed, in substance, by: "as custodian for
9-45 (name of minor) under the Texas Uniform Gifts to Minors Act.">
9-46 <(c) A donor makes a gift of an unregistered security by
9-47 delivering to another adult person or to a trust company the
9-48 security and a statement of gift signed by the donor and the
9-49 custodian that states, in substance:>
9-50 <"GIFT UNDER THE TEXAS UNIFORM GIFTS TO MINORS ACT>
9-51 <I, (name of donor), hereby deliver to (name of custodian) as
9-52 custodian for (name of minor) under the Texas Uniform Gifts to
9-53 Minors Act, the following security(ies): (insert an appropriate
9-54 description of the security or securities delivered that is
9-55 sufficient to identify it or them)>
9-56 <(signature of donor)>
9-57 <(name of custodian) hereby acknowledges receipt of the above
9-58 described security(ies) as custodian for the above minor under the
9-59 Texas Uniform Gifts to Minors Act.>
9-60 <Dated: ___________________>
9-61 <(signature of custodian).">
9-62 <(d) A donor makes a gift of money by paying or delivering
9-63 it to a broker or a bank for credit to an account in the name of
9-64 the donor, another adult, or a bank with trust powers followed, in
9-65 substance, by: "as custodian for (name of minor) under the Texas
9-66 Uniform Gifts to Minors Act.">
9-67 <(e) A donor makes a gift of a life or endowment insurance
9-68 policy or an annuity contract by delivering the policy or contract
9-69 to the custodian after it has been assigned to the custodian, in
9-70 the custodian's name, followed, in substance, by: "as custodian
10-1 for (name of minor) under the Texas Uniform Gifts to Minors Act.">
10-2 <(f) A donor makes a gift of the proceeds of a life or
10-3 endowment insurance policy or an annuity contract by making the
10-4 proceeds payable to the custodian in the custodian's name,
10-5 followed, in substance, by: "as custodian for (name of minor)
10-6 under the Texas Uniform Gifts to Minors Act.">
10-7 <(g) A donor makes a gift of an interest in real property by
10-8 executing and delivering the appropriate conveyance of the interest
10-9 to the custodian in the custodian's name, followed, in substance,
10-10 by: "as custodian for (name of minor) under the Texas Uniform
10-11 Gifts to Minors Act.">
10-12 <(h) A donor makes a gift of an interest in tangible
10-13 personal property by transferring the property by the appropriate
10-14 document to the custodian in the custodian's name, followed, in
10-15 substance, by: "as custodian for (name of minor) under the Texas
10-16 Uniform Gifts to Minors Act.">
10-17 <(i) A donor makes a gift of property under a will or a
10-18 trust by giving the property to an adult or to a trust company
10-19 followed, in substance, by: "as custodian for (name of minor)
10-20 under the Texas Uniform Gifts to Minors Act.">
10-21 <(j) If the donor of a gift under Subsection (i) does not
10-22 designate a custodian or if the designated custodian dies or is
10-23 unable or unwilling to serve, the personal representative or
10-24 trustee shall designate a custodian from those that are eligible
10-25 under this chapter to serve as successor custodian, and the
10-26 representative or trustee shall transfer the gift to the custodian
10-27 in the form and manner provided by this chapter. The custodian's
10-28 receipt is a release and discharge for the gift.>
10-29 <(k) A personal representative may elect the procedures
10-30 under this chapter to distribute a testamentary gift.>
10-31 <Sec. 141.005. EFFECT OF GIFT. (a) A gift under this
10-32 chapter is irrevocable and indefeasibly vests legal title to the
10-33 property in the minor, but a guardian of the minor has no right,
10-34 power, duty, or authority with respect to the custodial property
10-35 except as provided in this chapter.>
10-36 <(b) A donor who makes a gift under this chapter impliedly
10-37 incorporates the provisions of this chapter in the donor's gift,
10-38 trust, or will and grants to the custodian and third persons
10-39 dealing with the custodian the powers, rights, and immunities
10-40 provided by this chapter.>
10-41 <Sec. 141.006. DUTIES AND POWERS OF CUSTODIAN. (a) A
10-42 custodian shall collect, hold, manage, invest, and reinvest the
10-43 custodial property.>
10-44 <(b) The custodian may pay to the minor or expend for the
10-45 minor's benefit as much of the custodial property as the custodian
10-46 considers advisable for the support, maintenance, education, and
10-47 benefit of the minor:>
10-48 <(1) in the manner, at the time, and to the extent the
10-49 custodian considers suitable and proper;>
10-50 <(2) without a court order;>
10-51 <(3) without regard to the duty or ability of the
10-52 custodian or another person to support the minor;>
10-53 <(4) without regard to the minor's ability to provide
10-54 support; and>
10-55 <(5) without regard to the minor's other income or
10-56 property that may be applicable to or available for the minor's
10-57 support.>
10-58 <(c) The custodian shall deliver or pay unexpended custodial
10-59 property:>
10-60 <(1) to the minor, if the minor becomes 18 years of
10-61 age or ceases to be a minor because of marriage or the general
10-62 removal of disabilities of minority; or>
10-63 <(2) to the minor's estate, if the minor dies before
10-64 becoming 18 years of age.>
10-65 <(d) Notwithstanding statutes restricting the investments of
10-66 fiduciaries, the custodian shall invest and reinvest the custodial
10-67 property as would a prudent person of discretion and intelligence
10-68 who is seeking a reasonable income and the preservation of the
10-69 person's capital, except that the custodian may retain, in the
10-70 custodian's discretion and without liability to the minor or the
11-1 minor's estate, a security given to the minor under this chapter.>
11-2 <(e) The custodian may dispose of custodial property in a
11-3 manner, when, for the price, and on the terms the custodian
11-4 considers desirable, but the custodian may only acquire as
11-5 custodial property a security, money, a life or endowment insurance
11-6 policy, an annuity contract, real property, or, if the custodian is
11-7 a trust company, an interest in one or more common trust funds
11-8 maintained by the custodian under Subchapter E, Chapter 113.>
11-9 <(f) If the issuer of a security that is custodial property
11-10 is dissolved or liquidated, the custodian may receive the minor's
11-11 share of any property resulting from the dissolution or liquidation
11-12 and retain and manage it as custodial property, but the custodian
11-13 may sell or exchange it only for property authorized to be acquired
11-14 as custodial property.>
11-15 <(g) The custodian may vote a security, insurance policy, or
11-16 annuity contract held as custodial property in person or by general
11-17 or limited proxy.>
11-18 <(h) The custodian may consent directly or through a
11-19 committee or other agent to any action by the issuer of a security
11-20 held as custodial property, including the:>
11-21 <(1) reorganization, consolidation, merger,
11-22 dissolution, or liquidation of the issuer; or>
11-23 <(2) sale, lease, pledge, or mortgage of property by
11-24 or to the issuer.>
11-25 <(i) The custodian may execute and deliver any instrument
11-26 the custodian considers advisable to carry out the custodian's
11-27 powers.>
11-28 <(j) The custodian may perform the same acts regarding
11-29 custodial real property as an unmarried adult or a trustee under
11-30 the Texas Trust Code (Chapters 111 through 115) may perform in
11-31 regard to real property.>
11-32 <(k) The custodian shall:>
11-33 <(1) register custodial securities that may be
11-34 registered in the name of the custodian followed, in substance, by:
11-35 "as custodian for (name of minor) under the Texas Uniform Gifts to
11-36 Minors Act";>
11-37 <(2) deposit custodial money with a broker or in a
11-38 bank in the name of the custodian followed, in substance, by: "as
11-39 custodian for (name of minor) under the Texas Uniform Gifts to
11-40 Minors Act"; and>
11-41 <(3) clearly identify other custodial property as
11-42 custodial property and keep the custodial property separate from
11-43 the custodian's own property.>
11-44 <(l) The custodian shall keep records of all transactions
11-45 involving custodial property and shall allow inspection of the
11-46 records at reasonable intervals by:>
11-47 <(1) a parent of the minor;>
11-48 <(2) a legal representative of the minor; or>
11-49 <(3) the minor, if the minor is 14 years of age or
11-50 older.>
11-51 <(m) The custodian has the same incidents of ownership
11-52 concerning a life or endowment insurance policy or an annuity
11-53 contract that is part of the custodial property that an owner would
11-54 have, and the custodian may use custodial property to pay premiums
11-55 on the policy or contract. If the policy or contract is on the
11-56 life of the minor, the custodian shall designate the minor's estate
11-57 as the beneficiary of the policy or contract. If the policy or
11-58 contract is on the life of a person other than the minor, the
11-59 custodian shall be the beneficiary as custodian for the minor.>
11-60 <(n) In addition to the custodian's other rights and powers
11-61 under this chapter, the custodian has as a power in trust the same
11-62 rights and powers regarding the custodial property as a guardian
11-63 has regarding noncustodial property.>
11-64 <Sec. 141.007. CUSTODIAN'S EXPENSES, COMPENSATION, BOND, AND
11-65 LIABILITIES. (a) A custodian is entitled to reimbursement from
11-66 the custodial property for reasonable expenses incurred in the
11-67 performance of the custodian's duties.>
11-68 <(b) The custodian may serve without compensation, or a
11-69 custodian who is not the donor may receive from the custodial
11-70 property a reasonable compensation for service determined, in the
12-1 following order, by:>
12-2 <(1) the instructions of the donor at the time the
12-3 gift is made;>
12-4 <(2) the statute applicable to guardians; or>
12-5 <(3) a court order.>
12-6 <(c) Except as provided by Section 141.009, the custodian is
12-7 not required to give a performance bond.>
12-8 <(d) A custodian that is not compensated for services is not
12-9 liable for a loss to the custodial property unless the loss results
12-10 from the custodian's:>
12-11 <(1) bad faith;>
12-12 <(2) intentional wrongdoing;>
12-13 <(3) gross negligence; or>
12-14 <(4) failure to maintain the standard of prudence
12-15 required by this chapter in investing the custodial property.>
12-16 <Sec. 141.008. EXEMPTION OF THIRD PERSONS FROM LIABILITY.
12-17 An issuer, transfer agent, bank, broker, or other person acting on
12-18 the instructions of or otherwise dealing with a person who purports
12-19 to be a donor or custodian under this chapter is not responsible
12-20 for:>
12-21 <(1) determining if the person designated by the donor
12-22 or acting as custodian has been duly designated;>
12-23 <(2) determining if an act of the person, including a
12-24 purchase, sale, or transfer to or by the person, is in accordance
12-25 with or authorized by this chapter;>
12-26 <(3) questioning the validity or propriety under this
12-27 chapter of an instrument or any instructions executed or given by a
12-28 person acting as donor or custodian; or>
12-29 <(4) overseeing the application by a custodian of
12-30 money or other property paid or delivered to the custodian.>
12-31 <Sec. 141.009. RESIGNATION, DEATH, OR REMOVAL OF CUSTODIAN;
12-32 BOND. (a) A custodian, including a custodian who is the donor,
12-33 may petition the court for permission to resign and for the
12-34 designation of a successor custodian.>
12-35 <(b) A donor, the legal representative of a donor, an adult
12-36 member of the minor's family, a guardian of the minor, or the minor
12-37 if the minor is 14 years of age or older may petition the court,
12-38 for cause shown in the petition, to remove the custodian and permit
12-39 the designation of a successor or alternatively to require the
12-40 custodian to give a performance bond.>
12-41 <(c) On receiving a petition under this section, the court
12-42 shall issue an order to the persons, returnable on such notice as
12-43 the court requires, to show cause why the petition should not be
12-44 granted. The court may grant the relief the court considers in the
12-45 best interest of the minor.>
12-46 <Sec. 141.010. SUCCESSOR CUSTODIAN. (a) Only an adult
12-47 member of the minor's family, a guardian of the minor, or a trust
12-48 company is eligible to serve as successor custodian.>
12-49 <(b) The successor custodian has the same rights, powers,
12-50 duties, and immunities as the original custodian.>
12-51 <(c) The successor custodian is:>
12-52 <(1) the person designated by the resigning custodian,
12-53 other than the donor, in an instrument of resignation executed by
12-54 the custodian in the presence of a subscribing witness, other than
12-55 the successor, and delivered to the minor and the successor;>
12-56 <(2) if the custodian does not effectively designate a
12-57 successor, an eligible person that is designated by the donor in a
12-58 dated instrument of designation executed by the donor in the
12-59 presence of a subscribing witness other than the successor;>
12-60 <(3) if neither the custodian nor the donor
12-61 effectively designates a successor, the minor's guardian, or if
12-62 there is no guardian but the minor is 14 years of age or older, the
12-63 person designated by the minor in the manner prescribed for the
12-64 designation of a successor;>
12-65 <(4) if the custodian, donor, or guardian does not
12-66 effectively designate a successor and the minor is less than 14
12-67 years of age:>
12-68 <(A) the person designated by a parent of the
12-69 minor; or>
12-70 <(B) if there is not a parent of the minor, the
13-1 person designated by the court on the petition of an adult member
13-2 of the minor's family.>
13-3 <(d) The designation of a successor custodian under
13-4 Subsection (c) is effective as to each item of custodial property
13-5 when the custodian resigns, dies, or becomes legally incapacitated
13-6 and the custodian or the custodian's legal representative:>
13-7 <(1) causes a registered security, life or endowment
13-8 insurance policy, annuity contract, or interest in real property to
13-9 be registered in the name of or conveyed to the successor custodian
13-10 as, in substance, "custodian for (name of minor) under the Texas
13-11 Uniform Gifts to Minors Act"; and>
13-12 <(2) delivers or causes to be delivered to the
13-13 successor custodian the other custodial property, the instrument
13-14 designating the successor custodian, and any other instrument
13-15 required for the transfer to the successor.>
13-16 <Sec. 141.011. SUPPORT OF MINOR. On the petition of a
13-17 parent or guardian of the minor or on the petition of the minor if
13-18 the minor is 14 years of age or older, the court may order the
13-19 custodian to pay to or expend for the minor as much of the
13-20 custodial property as is necessary for the minor's support,
13-21 maintenance, or education.>
13-22 <Sec. 141.012. ACCOUNTING. (a) A donor, the legal
13-23 representative of the donor, an adult member of the minor's family,
13-24 the legal representative of the minor, or the minor if the minor is
13-25 14 years of age or older may petition the court for an accounting
13-26 by the custodian or the custodian's legal representative.>
13-27 <(b) In a proceeding under this chapter or otherwise, the
13-28 court may require or permit the custodian or the custodian's legal
13-29 representative to account.>
13-30 <(c) If the court removes the custodian, the court shall:>
13-31 <(1) require an accounting;>
13-32 <(2) order delivery of the custodial property to the
13-33 successor custodian; and>
13-34 <(3) order the execution of the instruments required
13-35 for the transfer of the custodial property.>
13-36 <Sec. 141.013. CONSTRUCTION. This chapter is not the
13-37 exclusive method for making a gift to a minor.>
13-38 <Sec. 141.014. PROPERTY HELD ON AUGUST 27, 1973. (a) If a
13-39 custodian held property under this chapter on August 27, 1973, the
13-40 custodian may elect to apply this chapter with respect to the minor
13-41 and the property held at that time, along with its proceeds and
13-42 reinvestments, as though Chapter 626, Acts of the 63rd Legislature,
13-43 Regular Session, 1973 (Article 5923b, Vernon's Texas Civil
13-44 Statutes), which lowered the age of majority from age 21 to age 18,
13-45 had not been enacted.>
13-46 <(b) The custodian must notify the minor in writing of this
13-47 election, after which the custodian shall treat any reference to
13-48 the age of 18 in this chapter as a reference to the age of 21.>
13-49 <(c) The custodian may revoke any election made under this
13-50 section.>
13-51 <(d) This section expires September 1, 1995.>
13-52 SECTION 2. (a) This Act takes effect September 1, 1995, and
13-53 applies to transfers made in a manner and form prescribed by
13-54 Chapter 141, Property Code, as amended by this Act, on or after
13-55 that date.
13-56 (b) This Act applies to transfers made before the effective
13-57 date of this Act in a manner and form prescribed by Chapter 141,
13-58 Property Code, as amended by this Act, except to the extent that
13-59 the application impairs constitutionally vested rights or extends
13-60 the duration of custodianships in existence on the effective date
13-61 of this Act.
13-62 SECTION 3. The importance of this legislation and the
13-63 crowded condition of the calendars in both houses create an
13-64 emergency and an imperative public necessity that the
13-65 constitutional rule requiring bills to be read on three several
13-66 days in each house be suspended, and this rule is hereby suspended.
13-67 * * * * *