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What is a UGMA and UTMA?

The Uniform Gifts to Minors Act (UGMA) is a set of rules under which adults can give to a minor via a custodial account in the minor's name. In some states, the UGMA has been superseded by the Uniform Transfers to Minors Act (UTMA)



The Uniform Gift to Minors Act creates a custodial investment account that minors can access when they reach the age of majority. Accounts are designed to teach children about saving and investing money, while providing a supplement to their current income.


The Uniform Transfers to Minors Act (UTMA) is a special type of trust that allows you to establish a legal relationship with your child. UTMA lets you control property for their benefit, pay for a child's education and spend the income to provide for the child's needs without affecting financial aid eligibility.

How To Pay For Your Children's College Education

A creative way for wealthier families to pay for their children’s college education involves transferring assets to children when they’re minors. Most states now allow such transfers under one or both of two federal laws: The Uniform Gifts to Minors Act, or UGMA, and the Uniform Transfers to Minors Act, known as UTMA. Transfers to minors are usually used to provide tax benefits to donors, but they can also be used to provide money for college.

What You Need to Know

  • Assets in UGMA and UTMA accounts become available to the minor when they reach the “age of majority,” which differs from state to state.
  • Donors can contribute just about any kind of asset to UTMA accounts, including real estate. Donations to UGMA accounts, on the other hand, are limited to bank deposits, securities, and insurance policies.
  • All assets transferred into UGMA and UTMA accounts are irrevocable; the child owns the assets whether he or she ends up going to college or not.

Please reach out if you’d like to further discuss options for paying for college. And if you know of anyone who would like to receive these short, educational emails, just send along their email address.

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