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. 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 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. How does life insurance help high net worth individuals protect their businesses ...

    Life insurance protects the businesses and personal wealth of high-net-worth individuals, or HNWI, by guaranteeing their ... Read Full Answer >>
  3. What are the restrictions for naming a given individual as my contingent beneficiary?

    Life insurance is an important part of estate planning. It allows you to ensure that you can financially take care of the ... Read Full Answer >>
  4. How do you mediate a dispute between primary and contingent beneficiaries of a trust?

    There may be a dispute between beneficiaries whenever the proceeds of a trust or other transfer on death (TOD) account are ... Read Full Answer >>
  5. What is the difference between the death benefit and cash value of an insurance policy?

    One of the most utilized tools in funding an estate plan is term or permanent life insurance. Purchasing a life insurance ... Read Full Answer >>
  6. What does U.S. law say about contingent beneficiaries?

    In the United States, posthumous asset transfers only require the listing of a primary beneficiary. Contingent beneficiaries ... Read Full Answer >>
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

    5 Estate Planning Must-Dos Before Saying "I Do"

    There are many exciting things to look forward to when a couple gets married; not among them is putting financial affairs in order. Advisors can help.
  4. Personal Finance

    Which Estate Transfer Technique is Right for You?

    This article explains the difference between the two estate transfer methods -- a will and a trust, and the circumstances under which each can be used.
  5. Professionals

    Estate Planning and Elderly and Passed Clients

    By keeping up with new estate tax rules, financial advisors can help elderly clients save big on tax costs.
  6. Economics

    What is a Fiduciary?

    A fiduciary is a person who acts on behalf of another person (or people) to manage assets.
  7. Retirement

    Retirement: The Journey Of 1000 Miles

    Substantial time should be set aside to fully outline one's vision for retirement and the specific steps that must be taken to realize it.
  8. Retirement

    Are You Getting The Best Retirement Advice?

    What you need to know in order to check.
  9. Professionals

    Tips for Spreading the Wealth to Relatives

    There are many ways that your clients can move money or other assets to relatives in order to reduce their tax bills. Here's a primer on best practices.
  10. Professionals

    Tips for Handling Client Inheritance

    When clients leave or receive an inheritance, be prepared to deal with much more than mere paperwork or financial transactions.

You May Also Like

Hot Definitions
  1. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  2. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  3. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  4. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
Trading Center