Uniform Transfers to Minors Act (UTMA Account)
What Is UTMA?
The Uniform Transfers to Minors Act (UTMA) is a law that allows assets to be transferred to minors through custodial accounts without establishing a formal trust. A designated custodian manages the assets until the minor reaches legal adulthood.
UTMA expanded the types of assets that can be transferred compared with UGMA accounts.
Why It Matters
UTMA accounts allow families to transfer wealth to children while maintaining responsible oversight. They also support long-term saving or investing for education or other future expenses.
The structure simplifies asset transfers without complex legal arrangements.
How UTMA Works
A custodian manages the account for a minor until the minor reaches the age of majority set by state law.
UTMA accounts can hold assets such as:
- cash and securities
- mutual funds
- real estate
- other property
Once the minor reaches the required age, they gain full control of the account.
Example
A relative transferring stock shares into a UTMA account for a child is using this structure to manage assets until adulthood.
UTMA vs UGMA
- UTMA allows a broader range of asset types.
- UGMA generally limits accounts to financial assets like stocks or bonds.
FAQs About UTMA
Who manages a UTMA account?
A custodian manages the account until the minor reaches adulthood.
Can UTMA accounts hold real estate?
Yes. UTMA accounts allow more asset types than UGMA.
Does the minor eventually control the account?
Yes. Full ownership transfers at the age of majority.
Related Terms
