This article is co-authored by Daniel B. Lundy, Esq., of Klasko Immigration Law Partners, LLP. His Firm’s blog is available here.
The USCIS stated in a stakeholder call on July 28, 2016 that minors can be primary applicants on I-526 petitions for visas under the EB-5 Program, but bear the burden of proving by a preponderance of the evidence that they have entered into a valid investment contract that is not voidable.
This acknowledgement by USCIS provides an opportunity for EB-5 sponsors to adopt a policy of accepting minor investors in EB-5 investment funds in a manner that can be proven to create a valid investment contract that is not voidable by the investor. The General Principles of the Civil Law of the Peoples Republic of China (“PRC“) provide one potential means of entering into a valid contract under PRC law. However, some EB-5 sponsors are reluctant to rely upon laws of the PRC as the basis for admission of minor investors, in part because of the uncertainty of what evidence would be necessary to prove that a contract is valid under the laws of the PRC to the satisfaction of the USCIS. For EB-5 sponsors seeking to rely on laws of the United States, the Uniform Transfers to Minors Act (“UTMA“) may provide the best means of establishing the validity of an investment contract with a minor investor.
UTMA has been adopted by nearly every state, and establishes a legal method to make a gift to a minor by using the required designation of ownership.
UTMA was drafted by the National Conference of Commissioners on Uniform State Laws in 1986, as an expansion and replacement for the Uniform Gifts to Minors Act (“UGMA“). UTMA has subsequently been adopted by every state except South Carolina, which still follows the Uniform Gifts to Minors Act. UTMA has also been adopted by the District of Columbia and U.S. Virgin Islands, but not by Puerto Rico. Under UTMA, any form of property, including securities, may be indefeasibly transferred to a minor by any transferor, simply by using the following designation of ownership: “_______________ [name of custodian], as custodian for ____________________ (name of minor) under the [name of Enacting State] Uniform Transfers to Minors Act.” Continue reading →