Section 11.22 Tax Planning

• Library: Trusts and Powers 2013 Supp

E. (§11.22) Tax Planning

If federal estate taxes are to be avoided, the person named custodian by a donor should be someone other than the donor. While this may defeat one of the purposes of the MTML—to provide a simple, convenient, and inexpensive method of administering property owned by a minor—the law expands the categories of persons who may be custodian to any adult person or financial institution. Sections 404.023 and 404.057.2, RSMo 2000. The former provision under the Missouri Uniform Gifts to Minors Law (now repealed) permitted only an adult member of the minor’s family as a successor custodian. A minor over age 14 may designate as successor custodian an adult member of the minor’s family. Section 404.057.8(1). The MTML expanded the minor’s family to include a spouse, stepparent, and any descendant of the minor’s grandparents, thus potentially increasing the persons who may be considered for custodian or successor custodian. Section 404.007(13), RSMo 2000. But a minor over age 14 may also designate as successor custodian the minor’s conservator or guardian, if the minor has one, or a financial institution. Section 404.057.8(1).

Making a gift of property that does not impose very stringent duties on the custodian for investment management or that is smaller in amount may be one way to utilize individual persons as custodians who otherwise might decline such an appointment. Mutual fund shares offer professional investment and reinvestment services within the fund itself without the custodian being required to actively make investment decisions inside the fund, other than selecting the appropriate fund or funds within the parameters of the Missouri Prudent Investor Act, §§ 469.900–469.913, RSMo Supp. 2005. See §11.25, infra.

If a donor is custodian at death, tracing of assets and proration may be required if the custodianship contains assets from other donors and transferors.

If income taxes are...