BILL REQ. #:  Z-0870.2 

Prefiled 12/29/2005. Read first time 01/09/2006.   Referred to Committee on Judiciary.

     AN ACT Relating to the uniform transfers to minors act; amending RCW 11.114.010, 11.114.020, 11.114.090, 11.114.120, 11.114.140, 11.114.180, 11.114.190, and 11.114.200; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 11.114.010 and 1991 c 193 s 1 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Adult" means an individual other than the minor who has attained the age of twenty-one years and is older than the minor.
     (2) "Benefit plan" means an employer's plan for the benefit of an employee or partner.
     (3) "Broker" means a person lawfully engaged in the business of effecting transactions in securities or commodities for the person's own account or for the account of others.
     (4) "Guardian" means a person appointed or qualified by a court to act as general, limited, or temporary guardian of a minor's property or a person legally authorized to perform substantially the same functions. Conservator means guardian for transfers made under another state's law but enforceable in this state's courts.
     (5) "Court" means a superior court of the state of Washington.
     (6) "Custodial property" means (a) any interest in property transferred to a custodian under this chapter and (b) the income from and proceeds of that interest in property.
     (7) "Custodian" means a person so designated under RCW 11.114.090 or a successor or substitute custodian designated under RCW 11.114.180.
     (8) "Financial institution" means a bank, trust company, savings institution, or credit union, chartered and supervised under state or federal law.
     (9) "Legal representative" means an individual's personal representative or guardian.
     (10) "Member of the minor's family" means the minor's parent, stepparent, spouse, grandparent, brother, sister, uncle, or aunt, whether of the whole or half blood or by adoption.
     (11) "Minor" means an individual who has not attained the age of ((twenty-one)) twenty-five years.
     (12) "Person" means an individual, corporation, organization, or other legal entity.
     (13) "State" includes any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession subject to the legislative authority of the United States.
     (14) "Transfer" means a transaction that creates custodial property under RCW 11.114.090.
     (15) "Transferor" means a person who makes a transfer under this chapter.
     (16) "Trust company" means a financial institution, corporation, or other legal entity, authorized to exercise general trust powers.

Sec. 2   RCW 11.114.020 and 1999 c 42 s 633 are each amended to read as follows:
     (1) This chapter applies to a transfer that refers to this chapter in the designation under RCW 11.114.090(1) by which the transfer is made if at the time of the transfer, the transferor, the minor, or the custodian is a resident of this state or the custodial property is located in this state. The custodianship so created remains subject to this chapter despite a subsequent change in residence of a transferor, the minor, or the custodian, or the removal of custodial property from this state.
     (2) A person designated as custodian under this chapter is subject to personal jurisdiction in this state with respect to any matter relating to the custodianship.
     (3) A transfer that purports to be made and which is valid under the uniform transfers to minors act, the uniform gifts to minors act, or a substantially similar act of another state is governed by the law of the designated state and may be executed and is enforceable in this state if at the time of the transfer, the transferor, the minor, or the custodian is a resident of the designated state or the custodial property is located in the designated state.
     (4) A matter under this chapter subject to court determination is governed by the procedures provided in RCW 11.96A.080 through 11.96A.200. However, no guardian ad litem is required for the minor, except under RCW 11.114.190(1), in the case of a petition by ((a [an])) an unrepresented minor under the age of ((fourteen)) eighteen years.

Sec. 3   RCW 11.114.090 and 1991 c 193 s 9 are each amended to read as follows:
     (1) Custodial property is created and a transfer is made if:
     (a) An uncertificated security or a certificated security in registered form is either:
     (i) Registered in the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act"; or
     (ii) Delivered if in certificated form, or any document necessary for the transfer of an uncertificated security is delivered, together with any necessary endorsement to an adult other than the transferor or to a trust company as custodian, accompanied by an instrument in substantially the form set forth in subsection (2) of this section;
     (b) Money is paid or delivered, or a security held in the name of a broker, financial institution, or its nominee is transferred, to a broker or financial institution for credit to an account in the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act";
     (c) The ownership of a life or endowment insurance policy or annuity contract is either:
     (i) Registered with the issuer in the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act"; or
     (ii) Assigned in a writing delivered to an adult other than the transferor or to a trust company whose name in the assignment is followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act";
     (d) An irrevocable exercise of a power of appointment or an irrevocable present right to future payment under a contract is the subject of a written notification delivered to the payor, issuer, or other obligor that the right is transferred to the transferor, an adult other than the transferor, or a trust company, whose name in the notification is followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act";
     (e) An interest in real property is recorded in the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act";
     (f) A certificate of title issued by a department or agency of a state or of the United States which evidences title to tangible personal property is either:
     (i) Issued in the name of the transferor, an adult other than the transferor, or a trust company, followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act"; or
     (ii) Delivered to an adult other than the transferor or to a trust company, endorsed to that person followed in substance by the words: ". . . . . . as custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act"; or
     (g) An interest in any property not described in (a) through (f) of this subsection is transferred to an adult other than the transferor or to a trust company by a written instrument in substantially the form set forth in subsection (2) of this section.
     (2) An instrument in the following form satisfies the requirements of subsection (1)(a)(ii) and (g) of this section:

Sec. 4   RCW 11.114.120 and 1991 c 193 s 12 are each amended to read as follows:
     (1) A custodian shall, as soon as custodial property is made available to the custodian:
     (a) Take control of custodial property;
     (b) Register or record title to custodial property if appropriate; and
     (c) Collect, hold, manage, invest, and reinvest custodial property.
     (2) In dealing with custodial property, a custodian shall observe the standard of care applicable to fiduciaries under chapter 11.100 RCW. 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. 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 according to the same standards as apply to a fiduciary holding trust funds under RCW 11.100.060. However, the provisions of RCW 11.100.025, 11.100.040, and 11.100.140 shall not apply to a custodian.
     (3) A custodian may invest in or pay premiums on life insurance or endowment policies on (a) the life of the minor only if the minor or the minor's estate is the sole beneficiary, or (b) 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.
     (4) 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 custodian for . . . . . . (name of minor) under the Washington uniform transfers to minors act."
     (5) 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 upon request for inspection by a parent or legal representative of the minor or by the minor if the minor has attained the age of ((fourteen)) eighteen years.

Sec. 5   RCW 11.114.140 and 1991 c 193 s 14 are each amended to read as follows:
     (1) A custodian may deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order and without regard to (a) the duty or ability of the custodian personally or of any other person to support the minor, or (b) any other income or property of the minor which may be applicable or available for that purpose.
     (2) On petition of an interested person or the minor if the minor has attained the age of ((fourteen)) eighteen years, the court may order the custodian to deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the court considers advisable for the use and benefit of the minor.
     (3) A delivery, payment, or expenditure under this section is in addition to, not in substitution for, and does not affect any obligation of a person to support the minor.

Sec. 6   RCW 11.114.180 and 1991 c 193 s 18 are each amended to read as follows:
     (1) A person nominated under RCW 11.114.030 or designated under RCW 11.114.090 as custodian may decline to serve. If the event giving rise to a transfer has not occurred and no substitute custodian able, willing, and eligible to serve was nominated under RCW 11.114.030, the person who made the nomination may nominate a substitute custodian under RCW 11.114.030; otherwise the transferor or the transferor's legal representative shall designate a substitute custodian at the time of the transfer, in either case from among the persons eligible to serve as custodian for that kind of property under RCW 11.114.090(1). The custodian so designated has the rights of a successor custodian.
     (2) A custodian at any time may designate a trust company or an adult other than a transferor under RCW 11.114.040 as successor custodian by executing and dating an instrument of designation. If the instrument of designation does not contain or is not accompanied by the resignation of the custodian, the designation of the successor does not take effect until the custodian resigns, dies, becomes incapacitated, or is removed, and custodial property is transferred to the successor custodian.
     (3) A custodian may resign at any time by delivering written notice to the minor, if the minor has attained the age of ((fourteen)) eighteen years, and to the successor custodian, and by delivering the custodial property to the successor custodian.
     (4) If a custodian is ineligible, dies, or becomes incapacitated and no successor custodian has been designated as provided in this chapter, and the minor has attained the age of ((fourteen)) eighteen years, the minor may designate as successor custodian, in the manner prescribed in subsection (2) of this section, an adult member of the minor's family, a guardian of the minor, or a trust company. If the minor has not attained the age of ((fourteen)) eighteen years or fails to act within sixty days after the ineligibility, death, or incapacity, the guardian of the minor becomes successor custodian. If the minor has no guardian or the guardian declines to act, the transferor, the legal representative of the transferor or of the custodian, an adult member of the minor's family, or any other interested person may petition the court to designate a successor custodian.
     (5) A custodian who declines to serve under subsection (1) of this section or resigns under subsection (3) of this section, or the legal representative of a deceased or incapacitated custodian, as soon as practicable, shall put the custodial property and records in the possession and control of the successor custodian. The successor custodian by action may enforce the obligation to deliver custodial property and records and becomes responsible for each item as received.
     (6) A transferor, the legal representative of a transferor, an adult member of the minor's family, a guardian of the minor, or the minor if the minor has attained the age of ((fourteen)) eighteen years may petition the court to remove the custodian for cause and to designate a successor custodian other than a transferor under RCW 11.114.040 or to require the custodian to give appropriate bond.

Sec. 7   RCW 11.114.190 and 1991 c 193 s 19 are each amended to read as follows:
     (1) A minor who has attained the age of ((fourteen)) eighteen years, the minor's legal representative, an adult member of the minor's family, a transferor, or a transferor's legal representative may petition the court (a) for an accounting by the custodian or the custodian's legal representative; or (b) for a determination of responsibility, as between the custodial property and the custodian personally, for claims against the custodial property unless the responsibility has been adjudicated in an action under RCW 11.114.170 to which the minor or the minor's legal representative was a party.
     (2) A successor custodian may petition the court for an accounting by the predecessor custodian.
     (3) The court, in a proceeding under this chapter or in any other proceeding, may require or permit the custodian or the custodian's legal representative to account.
     (4) If a custodian is removed under RCW 11.114.180(6), the court shall require an accounting and order delivery of the custodial property and records to the successor custodian and the execution of all instruments required for transfer of the custodial property.

Sec. 8   RCW 11.114.200 and 1991 c 193 s 20 are each amended to read as follows:
     (1) Subject to RCW 11.114.220, the custodian shall transfer in an appropriate manner the custodial property to the minor or to the minor's estate upon the earlier of:
     (((1))) (a) The minor's attainment of twenty-one years of age with respect to custodial property transferred under RCW 11.114.040 or 11.114.050;
     (((2))) (b) The minor's attainment of eighteen years of age with respect to custodial property transferred under RCW 11.114.060 or 11.114.070; or
     (((3))) (c) The minor's death.
     (2) The transferor may, in the initial nomination of custodian, extend the custodianship to the earlier of the minor's attainment of twenty-five years of age or the minor's death unless:
     (a) The governing will, trust, or instrument creating the power of appointment specifically provides otherwise if the custodian property is transferred under RCW 11.114.040, 11.114.050, or 11.114.060; or
     (b) The custodial property is transferred under RCW 11.114.070. In that case, the person nominating the custodian under RCW 11.114.030 may elect to extend the custodianship. If no custodian has been nominated under RCW 11.114.030, the court establishing the custodianship under RCW 11.114.070(4) may extend the custodianship if it determines that doing so would not be contrary to the interest of the minor.
     (3) An extension of the custodianship under subsection (2) of this section will be valid only if the transfer creating the custodianship is made on or after July 1, 2007.
     (4) Any bank, trust company, insurance company, registered broker-dealer, investment company regulated under the federal Investment Company Act of 1940, investment advisor regulated under the federal Investment Advisors Act of 1940, or other person who makes custodianship forms available for adoption in contemplation of selling assets to or managing assets for a custodianship shall include, in any form made available on or after July 1, 2007, an option to extend the custodianship under subsection (2) of this section and a warning to the transferor that exercising the option to extend may result in the transfer not qualifying for annual exclusion from federal gift tax. An instrument in the form described in RCW 11.114.090(2) will satisfy the requirements of this subsection.

NEW SECTION.  Sec. 9   This act takes effect July 1, 2007.