Uniform Transfers To Minors Act - UTMA

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What is the 'Uniform Transfers To Minors Act - UTMA'

The Uniform Transfers to Minors Act (UTMA) is an act that allows a minor to receive gifts such as money, patents, royalties, real estate and fine art, without the aid of a guardian or trustee. Under UTMA, the gift giver or an appointed custodian manages the minor's account until the latter is of age (usually 18 or 21). The Uniform Transfer to Minors Act also shields the minor from tax consequences on the gifts (up to a specified value).

BREAKING DOWN 'Uniform Transfers To Minors Act - UTMA'

Originally drafted in 1986 by The National Conference of Commissioners on Uniform State Laws, UTMA is an extension of The Uniform Gift to Minors Act (UMGA), which was limited to the transfer of securities. While UTMA is a great way to build a tax-free savings account for minor children, it should be noted that the assets will be counted as part of the custodian's taxable estate until the minor takes possession. UTMA assets might also work against a student seeking financial aid.

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RELATED FAQS
  1. Can minors invest in mutual funds?

    Learn how UGMA or UTMA accounts including mutual funds can be set up for minors through a guardian who oversees the account ... Read Answer >>
  2. Can I open an IRA for my three children ages 9,8 and 5?

    I am 41 years old and I am just learning what an IRA is. My parents never explained to me about retirement, however I want ... Read Answer >>
  3. Are UTMA accounts escheatable?

    Find out whether your UTMA account can be escheated, the basics of escheatment and who is responsible for maintaining account ... Read Answer >>
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