There are two types of custodial accounts:Uniform Transfers to Minors Act (UTMA)andUniform Gift to Minors Act (UGMA). Each type of account has its pros and cons, but the main difference is the type of assets that can be used in each account. ...
The account will conform to Uniform Gift to Minors Act (UTMA) or the Uniform Transfer to Minors Act (UTMA) rules depending on the state statutes. Income eligibility restrictions None Contribution age limits Generally up to age of termination (18 – 21) depending on state rules Maximum ...
Although anyone may contribute to a custodial account, control of the account is managed by the custodian. Once the minor beneficiary reaches the age of majority (as determined by the state), the custodian can transfer the funds in the account over the funds to the minor. Types of Custodial ...
The Uniform Transfers to Minors Act (UTMA) This account allows you to hold virtually any type of asset or property, including: Stocks Bonds Mutual funds Real estate Fine art Intellectual property UTMA accounts don’t have annual contribution limits, though gift tax may apply. Gifts and transfers...
Never transfer assets to a custodial account if you have any concern whatever that you may need to recover those assets later. Did you say age 21? When your child turns 21 (or an earlier age, in some states), the custodian must turn the assets over to the child. Some people are ...
At that point, the child is generally able to take control of the account and funds, though in some cases you may be able to continue to apply restrictions. You may also see custodial accounts described as UGMA/UTMA accounts. This is based on the Uniform Gifts to Minors Act or the ...
While both options allow you to protect assets for a child, a custodial account’s assets must be transferred to the child at a certain age, while a trust allows you greater flexibility in defining the terms of the transfer to the child. Read Viewpoints on Fidelity.com: Do you need a ...
An adult can transfer cash to a child using the Uniform Gifts to Minors Act, while the Uniform Transfer to Minors Act allows an adult to pass cash or other types of securities to a minor. In legal terms, people who make these gifts are called Transferors. A transferor can act as the ...
UGMA: Universal Gifts to Minors Act While this is a seemingly minor difference in naming convention, it has an impact on how you handle the account. In fact, each state has its ownmajority agefor both UTMA and UGMA. Majority age is the age at which the account will be transferred to th...
A custodial account is much simpler and less expensive to establish than atrust fund. The aim of both UGMA and UTMA regulations was to allow adults to transfer assets to minors without the need to establish a special trust to enable such ownership. Tax Advantages While nottax-deferredlike IRAs...