I typically do not recommend use of transfers to minors accounts, compared to the alternative of more-targeted trust planning. But, many clients still end up running into questions and situations dealing with transfers to minors accounts (sometimes called a minor’s custodial account). Also, I get questions from time to time about whether a child will get the minors account property at age 18 or 21.
Here is a quick cheat-sheet. Depending on the situation, there are both age 18 and 21 answers. This age 18 / 21 distinction under Georgia law is at O.C.G.A. Section 44-5-130. Click here for a link to the full gamut of these Georgia transfers to minors statutes. These age 21 situations are limited exceptions to the adult age of 18.
Hands on the Account at Age 21
The minor gets the account at age 21 if the transfers to minors account was set up intentionally as a transfers to minor account. This is the most typical, garden-variety transfers to minors account where, for example, grandmother sets up and funds the transfers to minors accounts for grandchildren, etc. Or, where the parents or anyone intentionally and purposely sets up the transfers to minors accounts.
In the above garden-variety situations, the minor has to turn age 21 before getting his or her hands on the account (even though the minor at age 18 is an adult for other purposes under Georgia law).
The other age-21 exception deals with trust and Last Will and Testament documents. Read the following section of this blog post carefully, as it affects whether the minor gets hands-on at age 21 or earlier at age 18.
Assume a minor stands to get a distribution of cash or property from a trust or from someone’s estate under a Last Will and Testament. If the trust or Last Will and Testament documents include an express reference — in the trust or Will document itself — allowing the trustee or executor to make the distribution into a transfers to minor account, then the trustee or executor can open and create transfers to minors accounts, make the distribution to the account, and age 21 applies.
The take-away point is that the trust document or Will must include an express reference to the trustee or executor having the power to distribute to a transfers to minors account in order for age 21 to apply. In other words, the person who created the trust or Will must have intended for the trust and Will to use transfers to minors accounts. This is the tie-in to my above comment about an intended use of these minors accounts.
The above age 18 / 21 point is that age 21 applies only under the above intentional circumstances.
For this intended age 21 element to apply for estate / trust planning, it is, therefore, imperative that your trust and Will documents include express authority for the trustee or executor to make distributions to minors into transfers to minors accounts. The express power to create and make distributions into transfers to minors accounts also applies if the trust or Will document incorporates expressly by reference the Georgia fiduciary powers under O.C.G.A. Section 53-12-261 (see Section 53-12-261(b)(27)(B) referring expressly to the power to create and fund transfers to minors accounts).
Better yet, create longer-term trust provisions for the minor beneficiaries so that the trust can exist for longer periods beyond age 21. My view is that age 21 is much too young for large amounts of property or cash to fall into the hands of any of these younger beneficiaries.
Hands on the Account at Age 18
By contrast, age 18 is the broader, general rule — even for transfers to minors accounts — when minors become age-18 adults under the law. Accordingly, in virtually all other situations not falling under the above age 21 exceptions, the creation and funding of transfers to minors accounts is still allowable and can be created for a minor, but the minor gets the account at age 18, not 21. The above link to the Georgia transfers to minors statutes provides much more detail than I include in this post.
Keep in mind in this age-18 situation there can (and will) exist a transfers to minors account to hold the property or cash, but the account will be subject to the age 18 element. This is because these age-18 minors accounts are not created under the above intended garden-variety and trust / Will exceptions. The nuances above likely appear overly academic; but have real consequences for this age 18 / 21 distinction.
Now, a final, negative kicker. If the trust or Will document does not include the above authorization for use of a transfers to minors acccount and the distribution amount exceeds $10,000, then a legal guardianship (and conservatorship) will be required for oversight of the property (or cash) until the minor turns 18. This is not an easy, cost-free option. For readers interested in technical details about this conservatorship result, start with the link above for reference to O.C.G.A. Section 44-5-116(c)(3). See also O.C.G.A. Section 29-3-6.