Legal Question in Wills and Trusts in New York
Uniform Gifts (Tranfers) to Minors Act Custodial Fraud
My grandmother placed 2000 shares of stock in a timed
trust for me when I was a child. The trust was to expire on my birthday in the year 2000, in my late
30s. My grandmother died before I was 14, and in 2000,
when I checked on the trust, I found only 1000 shares
in a UGMA custodial account with my mother! Moreover, the shares had been sold by my mother in 1999!
What laws (specifically) have been broken and by whom?
Can I report the stock stolen?
Is the holding company liable to me since I was
no longer a minor when they let her sell my stock?
2 Answers from Attorneys
Re: Uniform Gifts (Tranfers) to Minors Act Custodial Fraud
Let's get all the facts before we decide who is at fault and what laws were violated.
Was there a Trust establshed? Do you have a copy of the agreement, if any? Get it!!!
If you know the name of the stock (2000 shares) you were told was placed in trust, you can get information from the transfer agent. This will let you know if the trust actually owned the shares.
The shares may heve been transferred to the trust and then the trustee transferred them to UGMA status. That's a no-no.
If the gift was transferred to your mother under UGMA, the shares should have been transferred to you at age 18 (or in some cases age 21). You mother had the right to sell the shares even if she misused the money (this is not unknown).
She may have used the money for your benefit, and that's OK, as specified by UGMA (or maybe not).
If the money was not used for your benefit, then you have a claim against your mother (not much fun).
Once you dig out the facts, a complete analysis of your rights can be made.
Re: Uniform Gifts (Tranfers) to Minors Act Custodial Fraud
Several different concepts and several different answers, depending upon the actual facts:
1. Was there a trust actually created in writing - a formal agreement with a trustee being named and a specific statement of its purposes and uses? If so, you need to get a copy of the document to read its terms and provisions. If there was a specific document and its terms were breached - you may have a claim against the trustee for breach of fiduciary responsibility.
2. If there was a written document, did it allow funds to be used for your benefit, or someone else's until you were entitled to the outright distribution of assets? Were any funds used for these purposes? This may negate a claim if there were properly used.
3. Information can be obtained from the transfer agent for the company to see if any documents are on file with them.
4. You refer to 1000 shares held by your mother UGMA. This raises several questions: A. Is this how the shares were originally registered? B. Did the stock have a reverse split (reducing the original shares from 2000 to 1000)? C. Why did your mother not give you the shares when you were 18 or 21 (the required distribution age for a minor, depending when the shares were registered? D. Did your mother use the proceeds for you for any purpose, when she sold them (e.g., college, start a business, buy a home, etc.) E. There may be a possible claim against your mother for breach of fiduciary responsibility (do you want to sue her?).
There are more facts necessary to ascertain to give you a full answer. If you call me at 973-377-3313 or e-mail me as [email protected], I may be able to help you.
Walter
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