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Frequently Asked Questions

What is a UGMA account?

The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) allow minors to own assets including securities. Individuals can establish UGMA accounts on behalf of minors or beneficiaries, eliminating the need for an attorney to establish a special trust fund.

What are the UGMA and UTMA?

Not limited to education The UGMA and UTMA are custodial accounts, which are used to hold and protect assets for minors until they reach the age of majority in their state.

What are the tax implications of an UGMA?

UGMA Tax Implications. For tax purposes, an UGMA affects a donor’s lifetime gifting limits. Should a donor acting as the custodian die before the custodial property is transferred to the minor, the entire custodial property is included in the donor's taxable estate.

Are UGMA deposits irrevocable?

These deposits are irrevocable, however—they become permanent transfers to the minor and her account. Typically, UGMA assets are used to fund a child’s education, but the donor can make withdrawals for just about any expenses that benefit the minor. There are no withdrawal penalties.

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