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47.1

Gift For 12 years, Theodore Alexander Buder’s father made substantial gifts to his minor grandchildren. Theodore Buder and his wife divorced during this period. The cash gifts, typically in the form of checks made directly payable to the children, were given to Buder with the understanding that he would safeguard the money and invest it on behalf of the children. Buder invested various amounts of the children’s money in “blue chip” stocks traded over the New York and American stock exchanges. Buder also invested substantial sums of the children’s money in speculative penny stocks. The stocks were purchased in Buder’s name as custodian for the children, as required by the Uniform Gifts to Minors Act (UGMA). At one point, almost half of the children’s money was invested in penny stocks. All the penny stocks except one suffered substantial losses. Buder’s ex-wife, Sartore, sued him, alleging that he had breached his fiduciary duty owed to the children under the UGMA. She sought to recover the funds lost by Buder’s investment of the children’s funds in penny stocks. Who wins? Buder v. Sartore, 774 P.2d 1383, Web 1989 Colo. Lexis 227 (Supreme Court of Colorado)

Who wins?

Answer:

In the case of Buder vs. Sartore it deals with gifts to minors and the duties of the custodian of those gifts. The mother (Ms. Sartore) filed an action against the father (Mr. Buder) based on his alleged breach of the fiduciary duty he owed the couples minor children as the custodian of the gift money they had received from a grandparent. The trial court finds that the father had breached his fiduciary duty and assessed damages and attorney fees. The intermediate court affirmed and added attorney fees on appeal. The court held that (1) the standard of care under the Uniform Gift to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA), Colo. Rev. Stat, §§ 11-50-101 – 11-50-126 (1987) is not the same as under the general trust laws, Colo. Rev. Stat. § 15-1-304 (1973),...