Gifts to minors range from cash in a birthday card to very substantial gifts to accounts established to receive those gifts and hold them until the minor attains their majority and can access the funds. It is not unusual, however, for a parent to wish to disburse some of those funds on behalf of that minor at some point before the minor is able to access the funds.
Whether it is to purchase a car or perhaps pay for a trip, the amount may be substantial and it is important for all to keep in mind the applicable rules. First is the need for the use of the funds to be for the benefit of the minor beneficiary. As the parents (or guardians) are responsible to provide for the minor’s basic needs, the expense to be funded by the minor’s account generally should not fall within the categories of food, shelter, clothing, and other such needs. Naturally, the beneficiary should be on board with the idea of withdrawing funds for the intended purpose and it is also a good idea for the donor(s) of the funds being expended to be in agreement.
The custodian of the account, often a parent, will need to handle the actual disbursement and should keep copies of receipts, checks and other pertinent information. These will show the intent and purpose of the transaction and protect all the participants and particularly the custodian of the account from a claim that the withdrawal was improper. When one is working with funds belonging to someone else, they need to take care to handle them appropriately and to be able to show that is what they did.