Uniform Transfers To Minors Act - UTMA

AAA

DEFINITION of 'Uniform Transfers To Minors Act - UTMA'

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).

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Account In Trust

    An account that is managed by one party for the benefit of another. ...
  2. Estate

    All of the valuable things an individual owns, such as real estate, ...
  3. Custodial Account

    1. An account created at a bank, brokerage firm or mutual fund ...
  4. Fiduciary

    1. A person legally appointed and authorized to hold assets in ...
  5. Gift

    Property, money or assets that one person transfers to another ...
  6. Guardian IRA

    An IRA held in the name of a legal guardian or parent on behalf ...
Related Articles
  1. Designating A Minor As An IRA Beneficiary
    Taxes

    Designating A Minor As An IRA Beneficiary

  2. Leaving Inheritance To Children Easier ...
    Options & Futures

    Leaving Inheritance To Children Easier ...

  3. Why Your Will Should Name Designated ...
    Home & Auto

    Why Your Will Should Name Designated ...

  4. Should You Convert Your IRA?
    Retirement

    Should You Convert Your IRA?

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center