Oct312025
Probate Q&A Series

What steps does the uniform transfer to minors act require to manage sale proceeds for a minor heir? – North Carolina

Short Answer

In North Carolina, the Uniform Transfers to Minors Act (UTMA) uses a custodian—not a trustee—to hold and manage a minor’s funds until age 21. For real estate sale proceeds owed to a minor, you typically (1) get a court order approving the sale and securing the minor’s share, (2) nominate a UTMA custodian and obtain the Clerk of Superior Court’s authorization if the transfer exceeds a statutory threshold, and (3) deposit the funds into a properly titled UTMA account the custodian manages for the child’s benefit.

Understanding the Problem

North Carolina: Can a parent arrange for a custodian to manage a minor child’s share of sale proceeds after the court approves a sale of inherited property? Here, the client’s late spouse’s share passed to two children—one adult and one minor—so the minor now owns a share. The client wants to use the UTMA so a custodian can manage the minor’s sale proceeds.

Apply the Law

North Carolina’s UTMA lets an adult custodian hold any kind of property for a minor until age 21. When a minor is entitled to cash from a court-approved real estate sale, the court must secure the minor’s share, and one approved method is to transfer that share to a UTMA custodianship. If a personal representative, trustee, or guardian is the transferor, the Clerk of Superior Court must authorize the transfer when the minor’s share exceeds a set amount. The custodial account must be properly titled and kept separate. The custodian invests prudently, keeps records, and may spend for the child’s benefit, but UTMA funds do not replace a parent’s support duty.

Key Requirements

  • Valid transfer and approval: A personal representative, trustee, or guardian may transfer a minor’s funds to a UTMA custodian; if the minor’s share exceeds the statutory threshold, the Clerk must authorize the transfer.
  • Proper nomination and acceptance: Nominate an adult custodian in writing and obtain that person’s consent; the court does not select custodians for you.
  • Sale approval and security of proceeds: A court must approve the sale involving a minor and direct how the minor’s net proceeds will be secured (UTMA, deposit with the Clerk, or other protective arrangement).
  • Correct account titling and separation: Title the account in the custodian’s name “as custodian for [Minor] under the North Carolina UTMA,” keep funds separate, and maintain clear records.
  • Prudent management and permitted spending: The custodian follows a prudent-person standard, may spend for the minor’s benefit, and must not treat the funds as a substitute for a parent’s legal support obligations.
  • Age for distribution: UTMA custodianships end and funds are delivered to the child at age 21 (unless ended earlier by law or order).
  • Alternatives if UTMA isn’t used: The court can direct deposit with the Clerk (up to a statutory cap per source) or require a guardianship or other protective arrangement.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Because a minor co-owns the home, the sale must be court‑approved and the minor’s net proceeds secured. After the order of sale, you can nominate a UTMA custodian and ask the Clerk to authorize transfer of the minor’s share to that custodianship if the amount exceeds the approval threshold. The custodian then opens a properly titled UTMA account, keeps the funds separate, invests prudently, and may pay for the child’s needs. The custodian must deliver the balance to the child at age 21.

Process & Timing

  1. Who files: A co‑owner or other proper party. Where: Clerk of Superior Court in the North Carolina county where the property sits. What: File a special proceeding to approve sale (e.g., partition by sale) and request in the order that the minor’s net proceeds be transferred to a UTMA custodian; include a written nomination of the custodian and a request for Clerk authorization if required by statute. When: Typically started before listing or as part of a court‑supervised sale; court review can take weeks to a few months depending on the county.
  2. After the sale closes, the commissioner or closing attorney disburses the minor’s share according to the order—to the UTMA custodian if approved, or to the Clerk if the court so directs. Opening the UTMA account and depositing funds can generally be completed within 1–2 weeks once the order is in hand.
  3. The custodian manages, invests, and documents the funds until termination. On termination (generally when the child turns 21), the custodian delivers the balance to the child and closes the account.

Exceptions & Pitfalls

  • Calling the role a “trustee” is incorrect under UTMA; you must nominate a custodian and use UTMA titling.
  • If the minor’s share exceeds the statutory threshold, obtain the Clerk’s authorization for the UTMA transfer; without it, the court may require deposit with the Clerk or a guardianship.
  • Improper titling or commingling can jeopardize the funds; use the exact UTMA designation and keep separate records.
  • UTMA funds can’t replace a parent’s legal support duty; spending must be for the child’s benefit and consistent with prudent management.
  • County procedures vary; build in time for guardian ad litem appointment and sale confirmation steps in minor‑involved sales.

Conclusion

To manage a minor heir’s sale proceeds under North Carolina’s UTMA, secure a court‑approved sale, nominate a custodian, obtain the Clerk’s authorization if the transfer exceeds the statutory threshold, and title the account in UTMA form. The custodian must keep the funds separate, invest prudently, and spend only for the child’s benefit, then deliver the balance when the child turns 21. Next step: ask the Clerk of Superior Court to approve the sale terms and the UTMA transfer in the sale order.

Talk to a Probate Attorney

If you’re dealing with a court‑approved sale involving a minor’s share and need a UTMA custodian to manage the proceeds, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.