What does the Uniform Transfers to Minors Act establish?
The term Uniform Transfers to Minors Act (UTMA) refers to a law that allows a minor to receive gifts without the aid of a guardian or trustee. Gifts can include money, patents, royalties, real estate, and fine art. It also shields the minor from tax consequences on the gifts, up to a specified value.
At what age do UTMA accounts transfer?
Transferring an UTMA account Generally, the UTMA account transfers to the beneficiary when he or she becomes a legal adult, which is usually 18 or 21. However, the age of adulthood may be defined differently for custodial accounts, like UTMAs or 529 plans, depending on your state.
What is a UTMA state?
The Uniform Transfers to Minors Act (UTMA) allows you to name a custodian to manage property you leave to a minor. The management ends when the minor reaches age 18 to 25, depending on state law. When states have adopted UTMA, they often makes small changes to it, like varying the age at which the custodianship ends.
What is the California Uniform Transfers to Minors Act?
The California Uniform Transfers to Minors Act (“CUTMA”) is a modernization of the Uniform Gift to Minors Act, and became effective in 1985. A gift made pursuant to CUTMA is held in custodianship until age 18 unless the gift specifies a termination age beyond 18, but not over 25 years of age.
Can a parent withdraw money from a UTMA account?
Under the Uniform Transfers to Minors Act (UMTA), money deposited into a UTMA account can’t be withdrawn for any reason—except by the child at the appropriate age. In the United States, a child’s money does not belong to the child’s parents or guardians.
What happens to a UTMA account when the child turns 18?
When the minor beneficiary of an UTMA custodial account reaches the age of majority, the custodianship is over, and they get legal control over everything that’s in the account. It’s important to note that the age of majority is slightly different in each state. In most cases, it’s either 18 or 21.
What happens to a UTMA account when the minor turns 18?
What is custodial account for minors?
A custodial account is simply an investment account that’s in a child’s name but managed by an adult. It offers considerably more flexibility than other traditional child-oriented savings and investment options (think 529 plans and education savings accounts).
What states allow UTMA accounts?
Age of Majority and Trust Termination
What happens to a UTMA account when the minor turns 21?
What Happens to an UTMA When a Child Turns 21? When the child beneficiary of a custodial account reaches the age of majority in your state, everything in the account will pass onto them.
What is the difference between UTMA and UGMA?
The main difference between an UTMA and UGMA is what kind of assets they can hold. Assets within an UGMA are limited to bank deposits, stocks, bonds, mutual funds, and other securities and insurance policies. UTMAs allow almost any kind of asset, including real estate to be given to the minor.
What is an UGMA or UTMA account?
UGMA and UTMA accounts are considered the granddaddy of college savings accounts. The UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) are nothing more than custodial accounts, which are used to hold and protect assets for minors until they reach the age of majority in their state.
What is an UGMA account?
UGMA/ UTMA accounts are generally set up at a bank or brokerage firm. The custodian of an UGMA/UTMA account controls and manages the assets for a minor (the beneficiary of the account).
How do UTMA accounts work?
How UTMAs Work. Money placed into a UTMA accrues immediately to the benefit of a child. While a custodian is placed in charge of the account, the money technically belongs solely to the child. Gifts to the account are irrevocable and cannot be taken back.