The Caifornia Uniform Transfers to Minors Act
Similar to most other states, California law provides its residents with the ability to give gifts to minors under age 18. While such gifts may be given outright, doing so usually results in a court-appointed guardianship, a costly and cumbersome process. Giving the gift as a trust involves designating a trustee, keeping detailed records, and filing annual tax returns, activities that may be equally complex.

Making the gift under the provisions of the California Uniform Transfers to Minors Act may be an acceptable alternative. Under the Act, the assets, which may be stock, mutual funds, real estate, cash, or any other asset, are managed by a custodian on behalf of the minor. The custodian may invest the assets in any way the custodian feels is proper, but the minor is considered the owner of the assets and his or her Social Security Number is used for tax reporting. The taxable income is taxed to the minor, and if the he or she is less than 14 years old, may result in a "kiddy tax."
The custodian uses the assets until the minor reaches age 18, at which time the assets are turned over to him or her. The assets become part of the minor's estate if he or she dies, and if the death comes before the minor reaches age 18, the assets follow the rules of intestate succession and pass to the nearest relative.
If the donor wants and specifies it, the assets in the gift can be held back until the minor reaches age 21 instead of 18.
The assets in the gift given to the minor need to registered in the custodian's name, thus "John Henry, Custodian for Ben Smith until age 21, under C.U.T.M.A." Only one person at a time can serve as the custodian, but if he or she dies another one may be appointed.

Other ways to leave assets to someone under age 25 under the provisions of the Act are through a will, a living trust, or beneficiary designation.To accomplish this, the will, trust, or beneficiary designation must provide that the assets are held by the designated custodian under the C.U.T.M.A. until the recipient reaches age 25.
If the donor is also the custodian of the gift and dies before the gift passes to the recipient, the full value of the assets will be taxed in the donor's estate. To avoid this, the custodian and the donor should be different people. If Ann Smith wants to give her eight year old granddaughter a gift and acts as the gifts custodian, if she dies while still the custodian, the gift will be taxed in Ann's estate. If Ann named her daughter as custodian instead of herself, then none of the assets in the gift are taxable if Ann dies.