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If you have a large estate or expect to continue to make gifts to the child, you can ask them to sign over their UTMA assets to a restricted holding such as an FLP or an annuity or to spend the money as you direct them to, with the promise of receiving more money from you later. Or maybe as the recipient approaches legal age, you realize the child isn't mature enough to manage the assets. Its important to note that the age of majority is slightly different in each state. UTMA laws replaced the earlier Uniform Gift to Minors Act laws, which limited gifted assets to cash and securities. What Is a Custodial Account? - Investopedia Still, there are certain things you can do to change the nature of your gift and the way the child can access it when they reach the legal age. These cookies will be stored in your browser only with your consent. Because not every state chose to ratify the recommendation act that created the UTMA account, it may not be available where you live. 2023 Advance Local Media LLC. A big drawback is that all assets transferred into an UGMA account law are irrevocable transfers. By clicking Accept All, you consent to the use of ALL the cookies. The UTMA was never ratified in South Carolina. Find out how it works. Once the minor reaches the legal age of adulthood in their state, control of the account officially transfers from the custodian to the named beneficiary, at which point they claim full control and use of the funds. UGMA and UTMA accounts allow parents to save money and invest, maintain full control until their child is an adult. The UGMA (Uniform Gift to Minors Act) and UTMA (Uniform Transfer to Minors Act) are nothing more than custodial accounts, which are used to hold and protect assets for minors until they reach the age of majority in their state. 7 What does UTMA stand for in uniform gifts to Minors Act? Can you withdraw money from a UTMA account? Then, think hard about the assets youll want to hold and whether an UTMA is necessary. Unfortunately, a UTMA is an irrevocable account and legally belongs to your child. This law was originally recommended in 1956, and it was refined a bit more in 1966. 7 How old do you have to be to open a UGMA account?