1.2.2.6.1 Uniform Gifts to Minors Act (UGMA) Accounts
Uniform Gifts to Minors Act (UGMA) accounts are custodial accounts where an adult opens and manages the account for a minor. There can be only one custodian and only one minor. The minor and custodian do not need to be related, but the custodian must be an adult. The minor is the official, legal owner of the account and its assets, and the custodian is responsible for managing the account. The account is opened using the minor’s Social Security number. Custodians have third-party trading authorization, allowing them to make trades in the accounts. Because minors are not old enough to make trades, they cannot trade in the account. Full rights to the assets in an UGMA account are transferred to the minor once the minor reaches the age of majority in his state of residence.
Gifts can be made to the account from other adults, and all gifts are irrevocable, meaning they cannot be taken back once they are given. Gifts must be either cash or fully paid securities.
Assets in the account will be transferred to the minor’s estate upon the death of the minor, rather than being passe