Rule 108 Distributions to minors

Subdivision (a)(3). Where the personal representative petitions for authority to distribute estate assets to a minor under D.C. Code § 20-1106(a)(2) or § 20-1106(b), the fiduciary must be aware of the following characteristics unique to each method of distribution in order to set forth the basis for the selection of the method proposed, i.e., court-supervised vs. unsupervised arrangement, custodial distribution vs. non-custodial distribution, and accessible assets vs. non-accessible assets: Distributions of money or property with a value of $ 1,000 or less (D.C. Code § 20-1106(b)(1)) and distributions of tangibles (D.C. Code § 20-1106(b)(4)). -- Distributions may be made to a custodian of the minor designated by the Court, and if tangibles are valued in excess of $ 1,000, the Court may impose such conditions as it deems appropriate. The arrangement is unsupervised. If the tangible personal property is of significant value, distribution under the Uniform Transfers to Minors Act (see below) should be considered. It will provide more safeguards, as the custodian will be subject to statutory fiduciary standards of care. Distribution of money to a restricted bank account (D.C. Code § 20-1106(b)(2)). -- The Court must approve the bank, the account is held in the name of the minor, there is no ongoing supervision of the arrangements, and the money may be withdrawn only upon court approval. Restricted accounts appear appropriate for small sums of money where there may be no need to invade the principal to meet the needs of the child. It is advisable if the restricted account is the selected method of distribution (i) to arrange for the bank statements to be forwarded to the minor in whose name the account is established, regardless of age, so that the minor will remain informed, and to the parent of the minor or the custodian of the minor; and (ii) to consult the financial institution to verify that restricted accounts are permissible. Distributions under the Uniform Transfers to Minors Act (D.C. Code § 20-1106(b)(3)). -- The estate assets are held by a court-designated custodian on behalf of the minor in an unsupervised arrangement. Expenditures and investments may be made without court authority on behalf of the minor. The designated custodian under this act is accountable as a fiduciary under D.C. Code §§ 21-312 and 21-313. In this regard, care in the selection of the custodian is important because of the foregoing standards imposed. Distributions of real estate to a custodian designated by the Court (D.C. Code § 20-1106(b)(5)). -- Distribution is made in the name of the minor to a custodian designated by the Court. Although it is an unsupervised arrangement, the property may be sold only with Court approval. Court-appointed guardians (D.C. Code § 21-106). -- This is a supervised arrangement where the guardian serves under bond and files annual accountings. Court costs are assessed based on the estate value, and the guardian is responsible for annual bond premiums. The guardian must petition for authority to expend and invest estate assets on behalf of the minor. If small sums of money are involved, the guardianship of the estate of the minor may not be cost effective because of bond premium costs and the need to file petitions for court authority to make expenditures. Restricted accounts may be preferable. If significant assets are involved, one may wish to consider whether the minor's interest would be better served by the selection of a financial institution as the guardian, as opposed to an individual, in light of bond premium costs, since a financial institution may not be required to execute a bond if authorized under D.C. law to act as a fiduciary. Lastly, the practitioner is referred to Wills, Trusts, and Estates (Bar Association of D.C. 1973) for further treatment of this area.