What provision can be made to hold and manage assets for minor children and grandchildren?
If minor children receive income subject to tax, the annual tax return is filed by the parents or their legal guardian on their behalf at the National Revenue Agency office competent for the minor children.
It should be noted that disposal of property owned by a child may be performed only with the permission of the regional court at the current place of residence and provided that the disposal does not contravene the child's interests.
Assets could be held in a bare trust or a discretionary trust for the benefit of minor children of the settlor or minor children of a pre-deceased child of the settlor. A discretionary trust will defer a CAT charge from arising and CAT will only become due when assets are appointed out of trust to the beneficiaries.
Where such children are under 21 years of age, the DTT levies do not arise and therefore, a charge to tax will not arise provided all of the assets comprised in the trust are appointed out to the beneficiaries prior to the youngest beneficiary becoming 21 years of age.
Assets can be held and managed for minor children and/or grandchildren by a custodian or a Trustee.
Under the Uniform Transfers to Minors Act (UTMA), a person can open a custodial bank account for the benefit of a minor child. The assets in an UTMA account are managed by a designated custodian and distributed to the child when he or she attains the age of 18 or 21, depending on the state and the donor’s preference.
Another option is to transfer assets in trust for the benefit of a minor child or grandchild. Most standard trust arrangements will work, but some are more tax advantaged than others. For example, certain trusts allow the donor to make gifts that qualify for the annual exclusion. One type of these trusts requires that each beneficiary receive (a) notification of any contribution made to the trust, and (b) the opportunity to withdraw his or her share of the contribution. Another type gives the minor child the right to withdraw the assets of the trust upon attaining the age of 21. In either case, if the child chooses not to exercise his or her right to withdraw the assets within a specified window, the assets can remain in trust until some later date (designated by the settlor of the trust). Yet another type of tax-advantaged trust can make use of the GST exemption to shelter assets from transfer tax for multiple generations.
As already explained, because minors (children and grandchildren) are protected by the Civil Code, there is no standard provisions allowing holding and managing assets for them.
The trust remains a very efficient tool to achieve the protection of minors despite the caveat already explained in § 22.
Minors can own assets under Italian law. However, in such a case the law generally provides that the parents have the right of usufruct over such assets and that the income of the usufruct holder must be used for the maintenance of the family and for the education of the minor.
The assets of minors are usually managed by their parents who are the natural guardians. If necessary, trusts may be created for minors under a will.
Kindly see notes in question 17 in regards to “inheritance trust” and executors. Furthermore, according to the Greek Civil Code, living parents may –solely during their lifetime- withhold the real property’s usufruct or bare ownership right.
According to German law minors can hold assets regardless of their age. However, it is their parents who manage their assets on their behalf. Though, in certain cases a legal guardian needs to be appointed, for example when at least one parent or a close relative is a party of a contract that does not only provide legal benefits for the minor. Furthermore, if a contract establishes an economically considerable obligation of the minor (e.g. sale or purchase of real property, of business or shares) it has to be approved by the family court.
In case of inheritance the testator can name in his Will a person other than the minor’s parents to administer those assets that the minor will receive by way of succession. Instead the testator may appoint an executor for his estate who would manage the assets for minors until they reach a certain age.
A civil/family partnership (cf. question 18) or a private foundation (cf. question 26) can be used as structures to hold and manage assets for (grand)children.
When assets are donated to (grand)children, an administrator can be appointed to protect the children and administer the assets, e.g. until they reach a certain age. The same goes for bequests made in a will.
British Virgin Islands
Such provision is generally made by establishing a BVI trust which includes appropriately drafted terms.
Parents in UAE are advised to assign legal guardians for minor children, to hold and manage assets on behalf of a child until they reach the age of majority (21), or earlier if deemed appropriate. Guardians may be either interim and/or permanent, and the most appropriate mechanism in which to assign guardians is through provisions in a Will.
In addition to the tax and management advantages in relation to trusts, it should be noted that New Zealand trusts do not require probate and can provide extensive protective and guardianship provisions; the Trustee Act 1995 provides for special cases for the administration for spendthrift or special needs beneficiaries. Great flexibility is provided by New Zealand trusts in terms of distribution of income and capital to beneficiaries over the perpetuity period, and the capitalization and accumulation of income.
The management of a minor’s property is generally entrusted by law to his or her parents. This is known as the legal administration of a minor’s assets.
There is, however, an important exception to this principle. The Monegasque law allows any person to exclude from the legal administration by the parents the assets that he or she donates or bequests to a minor, provided that they are administered by a third party
designated by Will or deed of donation.
An individual can make a will to hold and manage assets for minor children and grandchildren, taking however into account the compulsory shares of the protected heirs (forced heirship, see above question 12).
24.1 The age of majority in the UK is 18 years. However, it is common for trusts and Wills to be drafted so that a child or grandchild's interest depends upon him reaching a greater age, for example, 21 or 25 years.
24.2 Property given to a child or grandchild who is under the age of 18 is generally held on trust (§19.1) for that individual, and the trustees (§19.1) may have wide powers under the terms of the gift or under the general law to invest and manage the property and to use it for his benefit before he reaches that age.
24.3 UK tax rules make it generally quite efficient for grandparents to set up bare trusts (§19.2) for their grandchildren, but not for parents to set up such trusts for their children. Where a grandparent makes a gift into bare trust for the exclusive benefit of a grandchild, that gift will not suffer any inheritance tax (§5) on the grandparent's death if the grandparent survives seven years from the date of the gift, and the income and capital gains arising to the trustees (§19.1) are treated as the grandchild's for tax purposes and so may fall within the grandchild's personal allowance (§2.3) and annual exempt amount (§2.10).