One of the funds WAS registered in their Dad's name, but I had that changed when he left. I am the custodian on both of the funds, one is with American Century and the other is with Delaware Funds. Not sure what you mean by what was paid for the funds. The initial investment on both were $5,000. They are both free and clear of their Dad. They are my boys' funds with me as custodian.
As far as the income bracket I'm in, I am in the very low income bracket. I paid NO taxes for 2007. I did not make enough income at all (long story), but this year that will change, although will still be in the low-income bracket.
I don't know anything about the laws, but when I spoke with the financial advisor that is the "broker" that opened the funds for us, he didn't tell me that there were any options other than paying 40%. Although that was two years ago. I am guessing there were other options at that time anyway.
Anything to do with these funds has always been taken care of by the broker. If I recall, when I called one of the companies wanting to switch the one fund that was in their Dad's name, they told me that I had to do it through my broker. So they were started through him.