How a Gift Transfer to a Minor Works
Sometimes the simplest approach is the most effective. This statute provides the mechanism for transferring property directly to a custodian for a minor through an outright gift or by exercising a power of appointment. Unlike a custodian nomination under Section 14-7653, which is revocable until a triggering event occurs, a transfer under this section is irrevocable from the moment it is completed.
A person may make a transfer by irrevocable gift to, or the irrevocable exercise of a power of appointment in favor of, a custodian for the benefit of a minor pursuant to section 14-7659.
A.R.S. § 14-7654The actual mechanics of completing the transfer follow the procedures in Section 14-7659, which vary depending on the type of property involved. Securities, real estate, and cash each have their own delivery requirements.
What This Means for Your Planning
A gift under this section is a common tool for grandparents and family members who want to transfer assets to a minor during their lifetime rather than waiting for a will or trust to take effect. The custodian manages the property under the UTMA rules until the minor reaches the age specified in the custodial arrangement.
Because the gift is irrevocable, it is important to understand that once the transfer is complete, you cannot reclaim the property. The custodian holds it for the minor's benefit and must manage it according to the duties outlined in the UTMA. For larger gifts, families may want to consider whether a trust offers more flexibility in controlling how and when the minor receives the assets.
