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Simple English definitions for legal terms
UGMA
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A quick definition of UGMA:
UGMA stands for Uniform Gifts to Minors Act. It is a law that allows adults to give money or property to children. The law also lets a grown-up called a custodian take care of the money or property until the child is old enough to use it. The custodian can use the money to help the child with things they need. Most states have this law, and it was updated in 1986. It used to be called the Gifts to Minors Act.
A more thorough explanation:
UGMA
UGMA stands for Uniform Gifts to Minors Act. It is a law that allows adults to give money or property to a minor (someone under 18 years old) without setting up a trust. The adult can appoint a custodian to manage the money or property until the minor reaches a certain age.
The law was created in 1956 and has been adopted by most states in the US. It was revised in 1986 and is now known as the Uniform Transfers to Minors Act (UTMA).
Example 1: John wants to give his 10-year-old niece, Sarah, $10,000 as a gift. He can use UGMA to transfer the money to Sarah without setting up a trust. He appoints his sister as the custodian to manage the money until Sarah turns 18.
Example 2: Mary wants to give her grandson, Jack, a piece of land worth $50,000. She can use UGMA to transfer the property to Jack without setting up a trust. She appoints her son as the custodian to manage the property until Jack turns 21.
These examples illustrate how UGMA allows adults to give money or property to minors without setting up a trust. The custodian appointed by the adult manages the money or property until the minor reaches a certain age. This helps ensure that the money or property is used for the minor's benefit and not wasted.