Uniform Gift or Uniform Transfers to Minors Act Accounts
UGMA and UTMA stand for Uniform Gifts or Uniform Transfers to Minors Act. Most states
have established these acts to provide adults with a flexible alternative to contributing
assets to a minor for college expenses or other uses.
Both UGMA and UTMA allow the establishment of custodial accounts for a minor. An
adult custodian is named to manage the account. UGMA and UTMA accounts allow you
to transfer assets (including stocks, bonds and other investments) directly to a
custodian for the benefit of a child.
UGMA/UTMA Account Benefits
- An UGMA/UTMA custodial account allows you to transfer or gift assets to a minor
without setting up a trust.
- The custodian can make withdrawals from the account for any purpose, and isn’t limited
in using the funds.
- Family members and other adults may contribute to the child’s account.
- You can contribute up to $12,000 a person each year free of gift tax.
- Investment earnings are usually taxed in your child's tax bracket. Refer to your
tax advisor for more specific tax questions.