ALTERNATIVES FOR FUNDING GIFTS TO MINORS

Linda J. Retz, Esq.^{* **}

I. INTRODUCTION

In the last two decades, several new and different options have become available to clients wishing to make gifts to young family members without petitioning the court to have a guardian of a minor beneficiary’s estate appointed. This article takes a look at the options, from the simplest to the more complex. It concludes with a discussion of the reasons for the proliferation of qualified tuition programs (under section 529 of the Internal Revenue Code) in the last several years.

No one vehicle is ideal for every client. The appropriateness of a particular vehicle will depend on many factors, among them, the degree of control the client wishes to exert over gifted assets, tax considerations, the costs of using a particular vehicle, investment options, the type of asset being given and the purposes for which distributions can be made to the beneficiary. Newer vehicles are not necessarily better than older ones. The analysis of what suits the client best must be done on a case by case basis. This article restricts its discussion to California law.