Sell Shares Held by Minor / Child

Many parents with young children choose to buy shares for their children which creates an informal trust.

In Australia however, the law states that a minor (individual under the age of 18) is unable to legally own property or shares. Therefore, an adult – often a parent or guardian – is required to ‘hold’ the shares for the minor until they turn 18 years of age and transfer out of the Minor Trust Account and into an account in the beneficiary’s own name using an Off-Market Transfer, which may incur a transfer fee.

Note: that while a child cannot be a “legal owner” of shares, a child can still receive the benefit from shares that an adult owns for them. In other words, they can be a beneficial owner.

Let’s say that Robert Smith decides to buy Woolworths shares for his 12 year old son, John. In this case, the shareholding name would be:

“Robert Smith”

The small brackets in the shareholding name denote what is called an ‘account designation’ which indicates a trust relationship. Here, Robert Smith (the legal owner of the shares) is holding the shares in trust for his son, John Smith (the beneficial owner).