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).

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.

RELATED TERMS
  1. Account In Trust

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

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

    1. A person legally appointed and authorized to hold assets in ...
  4. Guardian IRA

    An IRA held in the name of a legal guardian or parent on behalf ...
  5. Gift

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

    All of the valuable things an individual owns, such as real estate, ...
Related Articles
  1. Taxes

    Designating A Minor As An IRA Beneficiary

    Leaving liquid assets like cash or securities to minors can be a complicated procedure. Make sure you understand how your gift will be distributed, managed and taxed.
  2. Options & Futures

    Leaving Inheritance To Children Easier Said Than Done

    Consider your own retirement needs when deciding whether to leave an inheritance.
  3. Professionals

    How to Protect Elderly Clients from Predators

    Advisors dealing with older clients face a specific set of difficulties. Here's how to help protect them.
  4. Taxes

    How to Tell if You Need an Estate Planning Lawyer

    Estate planning is an important and often neglected part of financial planning, which can be costly when avoided or done improperly.
  5. Retirement

    Inherited IRA and 401(k) Rules: Don't Run Afoul

    What you need to know when it comes to the complex rules for inherited IRAs and 401(k)s.
  6. Professionals

    How to Avoid the Inheritance Nobody Wants: Debt

    With the biggest transfer of wealth underway, advisors need to ensure that clients don't also inherit debt.
  7. Professionals

    Why the Wealthy Shy Away from Inheritance Talk

    A recent survey of high-net-worth individuals shows that many avoid talking inheritance with children. Here are some ways to balance the sensitive topic.
  8. Professionals

    How to Help Retirees Manage Taxes on Distributions

    There are many variables when it comes to helping retirees manage taxes on distributions. Here's what advisors need to consider.
  9. Term

    What is Wealth Management?

    Wealth management combines financial and investment advice, accounting and tax services, and legal and estate planning.
  10. Professionals

    Top Financial Planning Issues for Older Parents

    Clients who have children later in life present an opportunity for advisors. Here are the key the financial planning issues that need to be addressed.
RELATED FAQS
  1. What is the minimum amount of money that I can invest in a mutual fund?

    Many mutual funds require a minimum initial investment of between $500 to $3,000, with institutional class funds and hedge ... Read Full Answer >>
  2. Can I put my IRA in a trust?

    You cannot put your IRA in a trust while you are living. You can, however, name a trust as the beneficiary of your IRA and ... Read Full Answer >>
  3. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  4. What is the difference between a revocable trust and a living trust?

    A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed ... Read Full Answer >>
  5. What is a family Limited Liability Company (LLC)?

    A family limited liability company (LLC) is formed by family members to conduct business in a state that permits such form ... Read Full Answer >>
  6. How is maintenance of standard of living for survivors accomplished in estate planning?

    Estate planning is an integral component of comprehensive financial planning, as it allows individuals and couples to maintain ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  2. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  3. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  4. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  5. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
  6. Wedding Warrant

    A warrant that can only be exercised if the host asset, typically a bond or preferred stock, is surrendered. Until the call ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!