In New York, many people boil estate planning down to the simplest solution. Namely, that is a will. However, there will be different circumstances and situations that warrant flexibility when crafting a plan. For some, a trust might be a better option. But they can also use the Uniform Transfers to Minors Act (UTMA), which is not a formal trust.

If a person has a minor child or a relative under 18 or 21 who they are concerned about and want to care for, they can establish a trust for them. However, if the person providing the funds and assets dies or becomes incapacitated before the minor becomes an adult, they will need to have a custodian to oversee it. This is a key role, and it is imperative to name a trustworthy person to perform it.

Factors to consider when nominating a custodian

Under New York State law, the custodian will oversee the assets for a specific amount of time. It could be until the minor is 18 or 21. The custodian will control the property, handle the funds, invest it in reasonable ways, and use it to benefit the minor. That can include their education, health care, ensuring they have a safe environment, and distribute funds to their benefit as the custodian sees fit.

The custodian is obligated to maintain records of all steps and transactions they take in overseeing the property. In total, the custodian is expected to protect the interests of the minor even if the minor objects.

The grantor needs to pick someone they believe will focus on the minor and ensure they are adequately cared for. In some cases, there are objectives the grantor wants to be met like enrolling in college. The custodian can be entrusted with ensuring that happens before releasing funds to the minor. Once the minor reaches the predetermined age when they are no longer under the custodian’s care, the assets will transfer to them.

Understand the various factors involved with a trust under UTMA

Using UTMA could protect a minor and establish conditions until they reach adulthood. However, this could be a risk. In some instances, the minor might have technically become an adult, but they are not yet prepared to handle the freedom that accompanies access to a significant amount of money and assets. When weighing options with how to protect minors as part of an estate plan, having professional assistance can give guidance and advice based on the circumstances.