CHAPTER 320

AN ACT TO AMEND CHAPTER 39, TITLE 12, DELAWARE CODE, IN RESPECT TO EXPENDITURES OF INCOME AND PRINCIPAL OF A MINOR'S ESTATE.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Section 3923, title 12, Delaware Code, is amended by striking out the said section and substituting the following in lieu thereof:

§ 3923. Expenditure of income and principal of a minor's estate

(a) Unless or until the Orphans' Court shall otherwise direct, a guardian of the property of a minor shall not be required to secure approval of the Orphans' Court before expending income of the personal and real estate of a minor for any one or more of the following purposes:

(1) The maintenance and education of a minor (up to $1,200 per year);

(2) The protection, maintenance, management and repair of a minor's personal and real estate;

(3) The payment of any taxes, assessments or charges which may be imposed by law or by governmental authority acting pursuant to law upon a minor or upon the personal and real estate of a minor.

(b) The Orphans' Court may, in its discretion, direct the amount of income and principal of the personal estate and the amount of income from real estate of a minor that a guardian of the property of a minor may expend for any of the purposes set forth in subparagraphs (1) through (3) of (a) above, and in addition, for any of the following purposes:

(A) The reasonable burial expenses of a deceased indigent parent, spouse or child of a minor;

(B) The improvement of any real estate of a minor;

(C) Such other purposes as the court may deem proper.

Without prior order of the Orphans' Court, a guardian of the property of a minor shall not expend principal of a minor's estate for any purpose except as hereinafter provided; nor shall such guardian cut or dispose of any wood or timber growing upon land of a minor. Notwithstanding the foregoing, a guardian of the property of a minor may, without prior order of the court, expend principal of the personal estate of a minor (unless or until otherwise ordered by the court) for the payment of any taxes, assessments or charges which may be imposed by law or by governmental authority acting pursuant to law upon a minor or upon the personal and real estate of a minor.

(c) Unless or until the Orphans' Court shall direct otherwise in the order of appointment of a guardian of the property of a minor, or any subsequent order, a guardian shall treat any guardianship property received as follows:

(1) To the extent it shall consist of any property, tangible or intangible, received as a corporate distribution, upon or with respect to shares of stock held in guardianship, including shares of the same class:

(A) As income to the guardianship, to the extent that, in the judgment of the guardian, such corporate distribution would be regarded as income from an investment rather than a diminution of an income producing property, by men of prudence, discretion, and intelligence in the management of their own affairs; and in making this determination, the guardian may consider whether such distribution would be likely, of itself to have the effect of reducing materially the future earning capacity and the future earnings of the corporation, whether such distribution would be likely of itself, to have the effect of reducing materially the future income of the guardianship from the shares of stock upon or with respect to which such distribution shall be made (assuming that the guardian should continue to hold such shares of stock for an indefinite period), and any other circumstances and factors which the guardian may deem relevant and significant.

(B) As principal to the guardianship, to the extent that, in the judgment of the guardian, such distribution is not determined to be guardianship income under the provisions of subdivision (A) above.

(2) to the extent it shall consist of any property, tangible or intangible, received otherwise than as a corporate distribution upon or with respect to shares of stock held in guardianship, as defined in (1) above:

(A) As income to the guardianship, to the extent that such receipts would be treated as income by men of ordinary prudence, discretion and judgment in the management of their own affairs, provided that the following receipts shall be uniformly deemed to be income:

(i) rent from real or personal property of the minor, including sums received for cancellation or renewal of a lease;

(ii) interest on money lent, including sums received as consideration for the privilege of repayment of principal;

() receipts from business, nursery and farming operations, to the extent of the net profits thereof, computed in accordance with generally accepted accounting practices for a comparable business or operation; and

(i) periodic payments of insurance annuities, pensions, Social Security and Railroad Retirement Board, or like benefits, whether received from public, private or governmental sources.

(B) As principal to the guardianship, to the extent that such receipts would not be treated as income, as defined in (A) above.

(3) For purposes of applying the provisions of this section, any income in excess of $500 which shall not have been expended by a guardian at the close of an accounting year will be transferred to and treated as principal in subsequent accounting years and shall not be further treated as income unless or until the Orphans' Court shall otherwise direct.

Approved June 21, 1968.