Section 11.26 Expenditures for Minor’s Benefit

• Library: Trusts and Powers 2013 Supp

D. (§11.26) Expenditures for Minor’s Benefit

The custodian may spend both the principal and income of the custodianship for the benefit of the minor. This would include payment of any enforceable claim against the minor for child support, taxes, or a tort or contract obligation.

In making expenditures of custodial funds, the law subjects the custodian’s decisions to the prudent-person rule or that degree of care that would be observed by a prudent person conducting the affairs of another. Section 404.051.6, RSMo 2000. The prudent-person rule has no generally understood application for expenditures. Excessive expenditures for expenses charged by the custodian might be contested under this provision. For benefit expenditures, its application is probably very limited because the minor can hardly be heard to complain if the expenditures are made for the minor’s benefit, and, if expenditures are not made, the property remains in the custodial estate.

There is no requirement limiting benefit expenditures to health, education, and support purposes. The custodian has wide latitude and discretion to spend custodial funds for the minor. See In re Muller, 235 N.Y.S.2d 125 (N.Y. Sup. Ct. 1962), aff’d, 18 A.D.2d 1067 (N.Y. App. Div. 1963), in which the custodian’s discretion not to pay for the minor’s trip to Europe was upheld as against the mother’s request. See also In re Levy, 412 N.Y.S.2d 285 (N.Y. Surr. Ct. 1978), for another case discussing the custodian’s discretionary authority to make expenditures from custodial funds.

As noted in §11.20 above, using custodial funds for support of the minor may result in...