What is an UTMA or UGMA?
An UTMA or UGMA is a custodial arrangement that allows individuals to open an account to benefit a minor child. The account is established under the child’s social security number, with an adult (usually a parent or guardian) as custodian. How can these accounts be used? UTMA or UGMA accounts can be used to offset the cost of higher education or simply to help a young person get started on the road to financial security. Note: Assets held in an UTMA or UGMA may affect a child’s financial aid eligibility for college. What’s the difference between UTMA and UGMA? While the accounts are generally very similar, there are two significant differences: • Age of Majority – In most states, the child can take ownership of an UGMA account at age 18. For UTMAs, the age of majority is usually 21. • Types of Gifts – Usually, only cash, mutual funds, securities and insurance policies can be held in an UGMA. The UTMA is more flexible and generally allows almost any asset to be gifted to the minor. Do s
