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The Uniform Transfers To Minors Act (UTMA) is a uniform act drafted and recommended by the National Conference of Commissioners on Uniform State Laws in 1986, and subsequently enacted by all U.S. States, which provides a mechanism under which gifts can be made to a minor without requiring the presence of an appointed guardian for the minor, and which satisfies the Internal Revenue Service ...
Until 1986, a UGMA or UTMA account allowed the assets to be taxed at the minor's income tax bracket. Tax law changes in 1986, 2006, 2007 and 2017 known as the "kiddie tax" have substantially reduced the tax savings of UGMAs and UTMAs.
Here’s how custodial accounts work.
Uniform Transfers to Minors Act (UTMA) accounts: UTMA accounts are more flexible than UGMA accounts, in that they can hold any type of property, whether it’s tangible or intangible, including ...
Custodial accounts come in a number of forms, one being an account set up for a minor, since the minor is under the legal age of majority. The custodian is often the minor's parent. In the U.S., this type of account is often structured as a Coverdell ESA, allowing for tax-advantaged
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