Uniform Transfers To Minors Act - UTMA

Loading the player...

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.

RELATED TERMS
  1. Uniform Gifts to Minors Act - UGMA

    An act that allows minors to own property such as securities. ...
  2. Account In Trust

    An account that is managed by one party for the benefit of another. ...
  3. Gift Tax

    A federal tax applied to an individual giving anything of value ...
  4. Gift

    Property, money or assets that one person transfers to another ...
  5. Custodial Account

    1. An account created at a bank, brokerage firm or mutual fund ...
  6. Gift In Trust

    An indirect bequest of assets to a beneficiary by means of a ...
Related Articles
  1. Term

    Understanding the Uniform Transfers To Minors Act

    The Uniform Transfers to Minors Act enables minors to receive property or gifts without a guardian or trustee’s aid.
  2. Professionals

    A Closer Look at Custodial Accounts

    FINRA Series 6: Section 12 A Closer Look at Custodial Accounts. This section, Custodial Accounts, constitues accounts for minors, power of Attorney and discretionary accounts.
  3. Professionals

    Custodial Accounts

    Custodial Accounts
  4. Professionals

    Opening a New Account and Account Types

    FINRA/NASAA Series 66 Section 2 - Opening a New Account and Account Types. This section discusses new accounts and principal account types: Individual, joint, corporate, partnership and fiduciary ...
  5. 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.
  6. Professionals

    Education Savings Vehicles

    Education Savings Vehicles
  7. Investing Basics

    What is a Minority Interest?

    A minority interest is an ownership or equity interest of less than 50% of an enterprise.
  8. Professionals

    Gifts of Present Interest & Gifts to Non-citizen Spouses

    Gifts of Present Interest & Gifts to Non-citizen Spouses
  9. Investing

    Advising FAs: Explaining College Savings Accounts to Clients

    There are several types of savings accounts designed for higher education available today. The right one for you will depend upon factors such as your tax bracket, time horizon, investment objectives ...
  10. Professionals

    Valuation Discounts for Business Interests

    Valuation Discounts for Business Interests
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. 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 >>
  3. When consolidating financials, how do you calculate Enterprise Value in cases that ...

    Read about the impact of minority interests in the calculation of Enterprise Value in consolidation cases that involve minority ... Read Answer >>
  4. Can I give stock as a gift?

    Stocks, bonds or any other securities can be transferred as gifts. Giving the gift of stock also has benefits for the giver. ... Read Answer >>
  5. What is the relationship between minority interest discount and fair market value?

    Learn how to determine the fair market value and minority interest discount for the sale of a share of a closely held corporation. Read Answer >>
  6. Why do investors with minority interest receive a minority interest discount and ...

    Discover why investors with minority interest usually receive a discount to the fair value of their ownership share, and ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center