Legal Definitions - Uniform Gifts to Minors Act

The Uniform Gifts to Minors Act (UGMA) is a law that allows adults to give money or property to a minor without the need for a trust or guardianship. The assets are held in a custodial account until the minor reaches the age of majority, which is usually 18 or 21 depending on the state.

For example, a grandparent may want to give their grandchild a gift of $10,000. Instead of setting up a trust or guardianship, they can use the UGMA to establish a custodial account for the child. The grandparent would name a custodian, who would manage the account until the child reaches the age of majority.

Another example is a parent who wants to transfer ownership of a rental property to their child. Instead of going through the complicated process of setting up a trust or guardianship, they can use the UGMA to transfer ownership to a custodial account for the child.

The UGMA is a useful tool for parents and grandparents who want to give gifts to minors without the need for a trust or guardianship. It allows for a simple and straightforward transfer of assets to a custodial account, which can be managed by a custodian until the child reaches the age of majority.