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The Uniform Transfer to Minors Act: A California Perspective
By Barbara Pronin
In most states, minors may not hold title to real estate until they reach majority age. Under the Uniform Transfer to Minors Act (UTMA), a transferor may designate a custodian for a minor transferee in a will, trust or deed so that gifts of property can be made to the minor, thus avoiding the need for court proceedings to appoint a custodian. In fact, the person who is transferring the property may name himself or herself as custodian or may designate another adult or a trust.
 
Drafted by the National Conference of Commissioners on Uniform State Laws, the UTMA has been adopted in one form or another in most states – including California – where two additional propositions, 58 and 193, also make it financially viable to transfer ownership within the family without the need to reassess the property.
 
Under Proposition 58, the property must be owned by the eligible parent or child. Under Proposition 193, a grandparent may be the eligible transferor. In either case, a Claim for Reassessment Exclusion must be completed.
 
The principal place of residence must have been granted a Homeowner’s Exemption or a Disabled Veteran’s Exemption before the transfer, but it need not become the principal place of residence of the person acquiring the property. In addition to gaining tax relief on the principal residence, the new owner may claim an exclusion on the transfer of other real property with an assessed value of up to $1,000,000 (or $2,000,000 for a married couple).
 
In other words, if a parent, for example, transfers the family home as well as other properties to a child, one of the transferred properties – selected at the discretion of the new owner – will be eligible for the exclusion. (Per the UTMA, if the recipient is a minor, the custodian named by the transferring owner will oversee this decision.)
 
If the transferred property is to be shared by more than one recipient (e.g. siblings), the person who files first gets the exclusion. In any case, a claim must be filed within three years after the date of transfer.
In the simplest terms, California’s Propositions 58 and 193, collectively, make it easier to keep real property “in the family.” The UTMA helps to facilitate the process when the recipient is a minor. 
 
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

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