Most commonly, international parents will pursue an EB-5 visa for themselves, their spouse, and any unmarried children under 21 years of age. But what happens when parents do not want U.S. residency, but instead want the EB-5 visa for their children to attend high school or college in America as U.S. residents? While it involves careful documentation, parents can gift the funds for an EB-5 investment to their minor children and their children can become the EB-5 applicant.
It is important to note that the U.S. Customs and Immigration Service (USCIS) does not have an established policy regarding the approval of minors as EB-5 investors. While there presently is no specific prohibition, international parents must work closely with their immigration attorneys to show that the investment contract is valid and not voidable. In the U.S., contracts entered into by minors are typically void or voidable by the child when he or she becomes an adult. However, under the Uniform Transfers to Minors Act, or UTMA (also known as the Uniform Gifts to Minors Act), a parent or guardian, acting on behalf of a minor child, can enter into a contract as a custodian on behalf of that child, and that contract is not voidable.
There are a few important points to remember.
- First, the parent(s) must gift the EB-5 investment funds to the child.
- Second, the money to fund the subscription to the EB-5 investment is wired from a bank account, which can be in the name of the parent/custodian or the name of the minor, to the EB-5 project bank account in the United States.
- Third, the parent at no point owns the child’s partnership or limited liability company interest in the EB-5 job-creating enterprise. Ownership must vest directly in the name of the child.
- Finally, although the parent(s) are responsible for managing the asset until the child turns 18 (or 21 in some American states), upon reaching this age, control automatically vests with the child.
The purchase of an interest in the EB-5 project under the UTMA on behalf of a child results in a non-voidable investment contract, which should satisfy the current EB-5 requirements as interpreted by USCIS. Even though there is no age limit set by law, regulation, or USCIS policy, it is wise to limit such transactions to cases where the child is at least 13 years old. Also keep in mind that many banks holding EB-5 escrow accounts either will not accept deposits from minors or do not have a policy on accepting such deposits, meaning that minor investors may have to waive escrow in order to make an EB-5 investment.
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