Issue: Earlier this week, a potential client emailed me with a question about the manner in which a successor Custodian of an UTMA Account can be appointed. She wrote the following:
My father recently died. Several years ago, he established an UTMA account for my 15 year old daughter. The financial institution where the account is held requires a court order appointing a successor Custodian before it will allow any changes to be made to the registration of the account or to the investments held in the account. Is this true? Can you tell me what I need to file with the court to get it to appoint a successor Custodian for the UTMA account for my daughter?
My response was as follows:
Are you certain that your father did not designate anyone to succeed him as Custodian of the UTMA account? He could have done so at the time he created the account. Try to obtain a copy of the document(s) he completed at the time he established the Uniform Transfers to Minors Act (UTMA) account and confirm for yourself that he did not designate a Custodian to succeed him. Let’s assume, however, that your father did not designate a successor Custodian when he completed the paperwork creating the UTMA account for your daughter, his granddaughter. What are the steps one must take to designate a successor Custodian of the UTMA account? See § 3918 of the California Probate Code; it contains the specific rules one must follow in order to appoint a successor Custodian of an UTMA account.
If you find that your father did not designate a successor Custodian, you may still be able to avoid incurring the expense of seeking a court’s order appointing a successor Custodian. This is because your daughter is over the age of 14 years. You see, § 3918(d) of the Probate Code provides that if a Custodian dies without having effectively designated a successor Custodian, then the minor for whom the UTMA account was created may designate an adult member of the minor’s family, a court-appointed guardian of the minor, or a trust company to be the successor Custodian, provided that the minor is at least 14 years old. However, act quickly because if your daughter does not designate a successor Custodian to take over the management of the UTMA account within sixty (60) days after the vacancy (i.e., in this case, within 60 days of your father’s death), the court-appointed guardian of the minor becomes the successor Custodian. I realize that there may be no court-appointed guardian for your daughter. Therefore, EITHER the personal representative of your father’s estate (either the Successor Trustee of his trust or the court-appointed Executor of his estate), OR an adult member of your daughter’s family (e.g., you, your daughter’s father, an adult sibling, etc.) can petition the court asking it to appoint a successor Custodian. There is no form, per se, that you can complete and provide to the court yourself. However, we would be honored to prepare the petition on your daughter’s behalf and file it with the court (assuming she has missed the 60-day deadline for appointing the successor Custodian). Since the only purpose of the petition is to ask the court to appoint a successor Custodian of the UTMA account, we could prepare and file it for a modest fee.
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Disclaimer: Please note that the information in this blog post does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact-specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. Finally, the information provided to you in this blog post does not create an attorney-client relationship.
Notwithstanding the disclaimer, I hope this information has been helpful. Please leave a comment about this post if you have the time. Thank you. James B. Creighton, Esq., Creighton Law Offices