Vt. Stat. Ann. tit. 14, § 3222
Care of custodial property
Redline — July 1, 2021 → current.View current text →
Current — June 1, 2022
As of July 1, 2021
(1) A custodian shall: take control of custodial property;
(1) A custodian shall: take control of custodial property;
(2) register or record title to custodial property if appropriate; and
(2) register or record title to custodial property if appropriate; and
(3) collect, hold, manage, invest, and reinvest custodial property.
(3) collect, hold, manage, invest, and reinvest custodial property.
(4) In dealing with custodial property, a custodian shall observe the standard of care that would be observed by a prudent person dealing with property of another and is not limited by any other statute restricting investments by fiduciaries. If a custodian has a special skill or expertise or is named custodian on the basis of representations of a special skill or expertise, the custodian shall use that skill or expertise. However, a custodian, in the custodian's discretion and without liability to the minor or the minor's estate, may retain any custodial property received from a transferor.
(4) In dealing with custodial property, a custodian shall observe the standard of care that would be observed by a prudent person dealing with property of another and is not limited by any other statute restricting investments by fiduciaries. If a custodian has a special skill or expertise or is named custodian on the basis of representations of a special skill or expertise, the custodian shall use that skill or expertise. However, a custodian, in the custodian’s discretion and without liability to the minor or the minor’s estate, may retain any custodial property received from a transferor.
(5) A custodian may invest in or pay premiums on life insurance or endowment policies on: the life of the minor only if the minor or the minor's estate is the sole beneficiary; or
(5) A custodian may invest in or pay premiums on life insurance or endowment policies on: the life of the minor only if the minor or the minor’s estate is the sole beneficiary; or
(6) the life of another person in whom the minor has an insurable interest only to the extent that the minor, the minor's estate, or the custodian in the capacity of custodian is the irrevocable beneficiary.
(6) the life of another person in whom the minor has an insurable interest only to the extent that the minor, the minor’s estate, or the custodian in the capacity of custodian is the irrevocable beneficiary.
(7) A custodian at all times shall keep custodial property separate and distinct from all other property in a manner sufficient to identify it clearly as custodial property of the minor. Custodial property consisting of an undivided interest is so identified if the minor’s interest is held as a tenant in common and is fixed. Custodial property subject to recordation is so identified if it is recorded, and custodial property subject to registration is so identified if it is either registered or held in an account designated in the name of the custodian, followed in substance by the words: “as a custodian for ________ (name of minor) under the Vermont Uniform Transfers to Minors Act.”
(7) A custodian at all times shall keep custodial property separate and distinct from all other property in a manner sufficient to identify it clearly as custodial property of the minor. Custodial property consisting of an undivided interest is so identified if the minor’s interest is held as a tenant in common and is fixed. Custodial property subject to recordation is so identified if it is recorded, and custodial property subject to registration is so identified if it is either registered or held in an account designated in the name of the custodian, followed in substance by the words: “as a custodian for _______________ (name of minor) under the Vermont Uniform Transfers to Minors Act.”
(8) A custodian shall keep records of all transactions with respect to custodial property, including information necessary for the preparation of the minor’s tax returns, and shall make them available for inspection at reasonable intervals by a parent, legal representative of the minor, financial guardian of the minor, or the minor if the minor has attained 14 years of age. Added 2015, No. 7, § 1.
(8) A custodian shall keep records of all transactions with respect to custodial property, including information necessary for the preparation of the minor’s tax returns, and shall make them available for inspection at reasonable intervals by a parent, legal representative of the minor, financial guardian of the minor, or the minor if the minor has attained 14 years of age.
OFFICIAL COMMENT
Subsection (a) expands Section 4(a) of the 1966 Act to include the duties to take control and appropriately register or record custodial property in the name of the custodian.
Subsection (b) restates and makes somewhat stricter the prudent man fiduciary standard for the custodian, since it is now cast in terms of a prudent person "dealing with property of another" rather than one "who is seeking a reasonable income and the preservation of his capital," as under the 1966 Act. The rule also adds a slightly higher standard for professional fiduciaries. The rule parallels section 7 - 302 of the Uniform Probate Code in order to refer to the existing and growing body of law interpreting that standard. The 1966 Act permitted a custodian to retain any security or bank account received, without the obligation to diversify investment. This subsection extends that rule to any property received.
In order to eliminate any uncertainty that existed under the 1966 Act, subsection (c) grants specific authority to invest custodial property in life insurance on the minor's life, provided the minor's estate is the sole beneficiary, or on the life of another person in whom the minor has an insurable interest, provided the minor, the minor's estate, or the custodian in his or her custodial capacity is made the beneficiary of such policies.
Subsection (d) generally tracks Section 4(g) of the 1966 Act but adds the provision requiring that custodial property consisting of an undivided interest be held as a tenant in common. This provision permits the custodian to invest custodial property in common trust funds, mutual funds, or in a proportional interest in a "jumbo" certificate of deposit. Investment in property held in joint tenancy with right of survivorship is not permitted, but the Act does not preclude a transfer of such an interest to a custodian, and the custodian is authorized under subsection (b) to retain a joint tenancy interest so received.
Subsection (e) follows Section 4(h) of the 1966 Act, but adds the requirement that income tax information be maintained and made available for preparation of the minor's tax returns. Because the custodianship is not a separate legal entity or taxpayer, the minor's tax identification number should be used to identify all custodial property accounts.
Official source: Vermont General Assembly. Reproduced from public-domain Vermont statutes; confirm against the official source for the current text. Not legal advice.