EB-5 Considerations: Minors as Principal Applicants

Summary

Chinese investors have faced a continuously lengthening backlog for EB-5 visas recently, and parents, concerned that their child may “age out” if a visa is not available on time, are seeking other methods of applying to the program. One method that some have considered involves gifting the funds to the child, and having the child become the primary applicant and investor. Below is a simple explanation of how this could work.

August 30, 2016


It should be clear that USCIS has no specific policy for minors acting as primary EB-5 investors. Currently there is no law saying minors cannot be primary applicants, but USCIS could change this in the future to prevent minors from acting as investors. Please take the following advice with caution, and be sure to limit the amount of minor investors you have in any project.

Should a minor be the primary EB-5 applicant, the investor must prove that the investment contract is valid and not voidable. The Uniform Transfer to Minors ACT (UTMA) allows a parent to act on behalf of his/her child and enter into a binding and non-voidable contract. The following must be written out and signed in order for the contract to be legal:

______________________ (NAME OF PARENT OR GUARDIAN) as custodian for ______________________

(NAME OF MINOR INVESTOR) under the [State] Uniform Transfers to Minors Act

______________________ Printed Name of Parent or Legal Guardian

______________________ Signature of Parent or Legal Guardian

Key points:

  1. The investment must be gifted to the child, in the child’s own (or joint with a parent) bank account.
  2. For the entirety of the investment period, the child, not the parent, will be the owner of the limited partnership.
  3. While parents have to manage the asset until the child reaches 18 (or 21, depending on the state), once the child reaches 18, the control is automatically shifted to the child.

Even though USCIS has set no age limit on the program, it is recommended that regional centers limit minor cases to 16 and 17 year-old children. It is possible that USCIS may create policy against this, and there is also the possibility of public or political criticism. Also, some EB-5 escrow accounts will not take deposits from minors, and as such the minor would have to waive the escrow requirement.

Minors acting as the primary investor in an EB-5 case is relatively new, so be prepared for more information or legislation in due time.

Source: Daniel Lundy - Klasko Law