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The Uniform Gifts to Minors Act, also known as UGMA, is a law that allows adults to give money or property to children without the need for a trust or complicated legal process. This money or property is held in a custodial account until the child reaches a certain age, usually 18 or 21, and can be used for their benefit in the meantime. It's a way for adults to give gifts to children in a simple and straightforward manner.
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.
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