The Pennsylvania Supreme court holds that money deposited into a custodian account under the Uniform Transfers to Minors Act irrevocably vests with the minor regardless of the donor's intent. Sternlicht v. Sternlicht (Pa., No. 46 WAP 2003, June 20, 2005).
Laurie and Harold Sternlicht were married and had a daughter. They created an Ameritrade account pursuant to the Pennsylvania Uniform Transfers to Minors Act (PUTMA) for the daughter, with Mr. Sternlicht as sole custodian. Following the couple's divorce, Mr. Sternlicht deposited money in the account, which was invested in stock, and the account grew. Later, he withdrew some funds to pay for his daughter's education and to make a down payment on a house.
Mrs. Sternlicht claimed the withdrawal violated PUTMA, and petitioned the court to remove Mr. Sternlicht as custodian and make him replace the money. Mr. Sternlicht argued that he did not intend to gift his daughter the money he deposited in the account.
The trial court found that under common law, donative intent was necessary for an inter vivos gift and because Mr. Sternlicht didn't intend to gift the money, he did not have to return it. Mrs. Sternlicht appealed. The appeals court reversed, and Mr. Sternlicht appealed.
The Supreme Court of Pennsylvania affirms, holding that PUTMA supercedes common law and Mr. Sternlicht must return the money. According to the court, under PUTMA, money deposited into a custodian account irrevocably vests with the minor regardless of the donor's intent.
To download the full text of this decision in PDF format, go to: https://www.courts.state.pa.us/OpPosting/Supreme/out/J-130-2004mo.pdf.
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