Define: UGMA

Quick Summary of UGMA

The Uniform Gifts to Minors Act (UGMA) is a law that permits adults to give money or property to children. Under this law, a custodian is appointed to manage the money or property until the child reaches the appropriate age to utilise it. The custodian is authorized to use the funds for the child’s necessities. This law, previously known as the Gifts to Minors Act, was revised in 1986 and is applicable in most states.

Full Definition Of UGMA

The Uniform Gifts to Minors Act (UGMA) is a law that enables adults to give money or property to minors without the need to establish a trust. Under UGMA, a custodian can be appointed to manage the funds or property until the minor reaches a specified age. Originally created in 1956, UGMA has been adopted by most states in the US. In 1986, it was revised and is now known as the Uniform Transfers to Minors Act (UTMA).

For example, John can use UGMA to gift his 10-year-old niece, Sarah, $10,000 without setting up a trust. He appoints his sister as the custodian to oversee the funds until Sarah turns 18. Similarly, Mary can transfer a $50,000 piece of land to her grandson, Jack, using UGMA and appoint her son as the custodian until Jack turns 21.

These examples demonstrate how UGMA allows adults to transfer money or property to minors without the need for a trust, with the appointed custodian ensuring that the funds or property are used for the minor’s benefit and not squandered.


UGMA stands for the Uniform Gifts to Minors Act.

The purpose of Ugma is to allow adults to make financial gifts to minors without the need for a formal trust.

Under Ugma, an adult (known as the donor) can transfer assets to a custodian for the benefit of a minor. The custodian manages the assets until the minor reaches the age of majority, at which point the assets are transferred to the minor.

Ugma allows for the transfer of various types of assets, including cash, stocks, bonds, real estate, and other investments.

No, once the assets are transferred to the custodian, they become the property of the minor and cannot be reclaimed by the donor.

In some cases, the custodian may have the discretion to use the assets for the minor’s benefit before they reach the age of majority. However, the primary purpose of Ugma is to hold the assets until the minor becomes an adult.

No, the custodian has a fiduciary duty to manage the assets solely for the benefit of the minor.

Yes, once the minor reaches the age of majority, they have full control over the assets and can use them as they see fit.

Yes, both the donor and the minor may have tax obligations related to the assets transferred under Ugma. It is advisable to consult with a tax professional for guidance.

Yes, Ugma accounts can be opened in any state that has adopted the Uniform Gifts to Minors Act. However, specific rules and regulations may vary slightly from state to state, so it is important to consult with a legal professional familiar with the laws of your state.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 17th April 2024.

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