Uniform Transfers To Minors Act - UTMA

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.

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RELATED FAQS
  1. Are UTMA accounts escheatable?

    Like most financial assets held by institutions such as banks and investment firms, UTMA accounts can be escheated by state ... Read Full Answer >>
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    A mutual fund can be opened under the name of a minor through a custodial account overseen by a guardian. The custodian holds ... Read Full Answer >>
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    Many mutual funds require a minimum initial investment of between $500 to $3,000, with institutional class funds and hedge ... Read Full Answer >>
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    Estate planning fees may be tax deductible, but only if certain conditions have been met. Internal Revenue Service (IRS) ... Read Full Answer >>
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