| If you are acting as the custodian of a minor's property, this may interest you.
New Jersey enacted the Uniform Transfers to Minors Act as a convenient way to perfect gifts to minors without the complexity and expense of a formal trust arrangement. Under the Act, a grantor's gift is effective immediately, but a designated custodian holds and administers the gift until the grantee reaches the age of majority. At that time, the gift is turned over to the grantee.
The custodian owes fiduciary duties to the minor. In other words, the custodian must use the gift in the child's best interests.
Recently, the Family Part of the Chancery Division defined the extent of a court's power to review decisions by a custodian.
In the case, the custodian held common stocks gifted to the minor. The minor was attending a private school designed to assist children suffering from dyslexia.
One parent wanted the custodian to liquidate the child's gift to help pay the tuition costs. The custodian refused.
YOU BE THE JUDGE: Does a custodian have the right to overrule a parent's decision about how to use trust funds?
The Court ruled that a custodian has the same general powers as a trustee. While a court has power to override a custodian's decision, that power is to be exercised only upon proof that custodian abused the discretion to act in the best interests of the minor.
The burden to show abuse of discretion falls to the party who seeks the Court's assistance. In this case, there was insufficient proof that the custodian abused this discretion in refusing to use the child's gift for tuition expenses.
The decision points out that a courtroom can bring justice and may be the only way to protect your rights. We know courtrooms; we have harnessed the power of the law in courtrooms to bring justice for our clients for decades. Please contact us to discuss how we can help you in a new lawsuit or provide a "second opinion" about your pending lawsuit. There is no obligation for the initial consultation. |
