What is the difference between an UTMA and an UGMA?
The Uniform Gifts to Minors Act (“UGMA”) established rules on the purchase of securities for a minor. With a UGMA, an adult donor gives an irrevocable gift of cash or securities to a minor, which must be registered in the name of the adult as custodian for the minor. Access to the gift is given to the minor when he or she reaches the age of majority in the state where the UGMA was established (which can vary by state). The Uniform Transfer to Minors Act (“UTMA”) is an extension to UGMA that allows for the postponement of the transfer of assets to the former minor’s control beyond the age of majority. UTMA allows minors to own other types of property, such as real estate, fine art, patents and royalties, and for the transfers to occur through inheritance. UTMA is also slightly more flexible than UGMA.
