UTMA vs UGMA: Differences Between these Custodial Accounts

Uniform Gifts for Minors Act Accounts and Uniform Transfers to Minors Act accounts both protect assets from a child’s full control until reaching the age of majority in their state of residence.

What is a Custodial Account?

Custodian is defined as “the person who manages assets for another” and typically refers to an adult who holds legal responsibility for the account on behalf of the child—usually their parent.

What is a Uniform Gifts to Minors Act Account (UGMA)?

UGMA (Uniform Gifts to Minors Act) accounts are custodial accounts typically set up by parents, guardians, grandparents or other relatives, who then serve as custodians for the child’s account until reaching the age of termination or majority in their particular state.

What is a Uniform Transfers to Minors Act Account (UTMA)?

UTMA accounts (Uniform Transfers to Minors Act) are also custodial accounts and are not limited to a specific dollar amount each year. UTMA accounts can hold any type of property, meaning they can have the above financial instruments, real estate, and real property.

What is the Difference Between an UGMA and UTMA Account?

1. Types of Assets Held Within the Account

UTMA accounts can hold any type of property, meaning they can hold the above financial instruments and real estate and real property.

What is the Difference Between an UGMA and UTMA Account?

2. State Adoption Policies

All states have adopted UGMA accounts, but Vermont and South Carolina have not allowed UTMA accounts.

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