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Under the UGMA or UTMA, the ownership of the funds works like it does with any other trust and the donor must appoint a custodian (the trustee) to look after the account for the benefit of the beneficiary. [citation needed] Until 1986, a UGMA or UTMA account allowed the assets to be taxed at the minor's income tax bracket. Tax law changes in ...
Once the child reaches the age of majority (18 or 21, depending on the state), the assets become fully theirs to use as they see fit. ... UGMA accounts do not have the same tax advantages as Roth ...
An alternative to a custodial account is a savings account that’s designed for children under age 18, and there is joint ownership between the parent and child. ... UGMA/UTMA accounts: UGMA and ...
Because they’re held in the name of the child, UTMA/UGMA accounts can hurt financial aid eligibility more than 529 plans or assets owned by parents. “There’s a 20 percent impact to financial ...
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 ...
After the voting age was lowered from 21 to 18, the age of majority was lowered to 18 in most states. In most US states, one may obtain a driver's license, consent to sexual activity, and gain full-time employment at age 16 even though the age of majority is 18 in most states. [ 3 ]
Here’s how custodial accounts work.
One way to do both is with a custodial brokerage account, often referred to as an UTMA or UGMA account -- named for the Uniform Transfer to Minors Act and the Uniform Gift to Minors Act -- that is ...