Jeffrey Wade
The Uniform Transfers to Minors Act (UTMA) allows an adult to transfer assets to a minor by opening a custodial account for them. This type of account is managed by an adult custodian who holds onto the assets until the minor reaches a certain age, usually 18 or 21. Under a state's UTMA, you can designate that the proceeds from your life policy are paid to an adult custodian for the benefit of your minor child and held in an UTMA account.
| Characteristics | Values |
|---|---|
| Type of account | Custodial account |
| Assets | Wide variety of assets, including life insurance policies |
| Who can open it | Adults |
| Who it is for | Minors |
| Who manages it | Custodian |
| Who the custodian is | Chosen by the adult opening the account |
| Who the custodian is not | The same as the minor's guardian |
| Restrictions | None once the minor comes of age |
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What You'll Learn
The UTMA is a type of trust that can be arranged without an attorney
The Uniform Transfers to Minors Act (UTMA) is a type of trust that can be arranged without an attorney. It can be set up at a bank or brokerage company and requires only the minor's social security number and a custodian named to manage the child's account. The custodian is the person you have chosen to manage the money on behalf of the minor. This is not necessarily the same as a guardian, who is the person who will physically care for the child in the event of the parent's death.
The UTMA allows an adult to transfer assets to a minor by opening a custodial account for them. This type of account is managed by an adult, who holds onto the assets until the minor reaches a certain age, usually 18 or 21. Once the minor comes of age, there are no restrictions on how the money and property can be used.
Under your state's UTMA, you can designate that the proceeds from your life policy are paid to an adult custodian for the benefit of your minor child and held in an UTMA account. This means that an adult can make a gift of a life insurance policy indirectly to a minor, regardless of age, by designating a custodian to receive, hold, and manage the gift on their behalf until they reach the age of majority.
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A custodian is the person chosen to manage the money
A Uniform Transfer to Minors Act (UTMA) account is a custodial account that can hold a wide variety of assets on behalf of a minor. The custodian is the person chosen to manage the money and assets, such as real estate, stocks, bonds, and collectibles. The custodian is not necessarily the same as a guardian, who is the person who will physically care for the child in the event of the parent's death. The custodian is responsible for receiving, holding, and managing the assets on behalf of the minor until they reach the age of majority, usually 18 or 21. At that point, there are no restrictions on how the money and property can be used.
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A guardian is the person who physically cares for the child
The Uniform Transfers to Minors Act (UTMA) allows an adult to transfer assets to a minor by opening a custodial account for them. This type of account is managed by an adult custodian who holds onto the assets until the minor reaches a certain age, usually 18 or 21. Under the UTMA, you can designate that the proceeds from your life insurance policy are paid to an adult custodian for the benefit of your minor child.
A custodian is not necessarily the same thing as a guardian. In the event of your death, your child's guardian is the person who physically cares for them. However, a custodian is the person you have chosen to manage their money. So, while your chosen guardian will be a parent in your absence, this person might not be who you would choose to manage a large sum of money or assets such as real estate, stocks, bonds, or collectibles.
A UTMA account can hold a wide variety of assets on behalf of a minor. Once the minor comes of age, there are no restrictions on how the money and property can be used. A UTMA is a type of trust that you can arrange without an attorney. It can be set up at a bank or brokerage company and requires only the minor's social security number and a custodian named to manage the account.
Under the UGMA/UTMA, an adult may make a gift of a life insurance policy indirectly to a minor, regardless of age, by designating a custodian to receive, hold, and manage the gift on their behalf.
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A UTMA account can hold a wide variety of assets
The Uniform Transfers to Minors Act (UTMA) allows an adult to transfer assets to a minor by opening a custodial account for them. This type of account is managed by an adult, known as a custodian, who holds onto the assets until the minor reaches a certain age, usually 18 or 21. A UTMA account can hold a wide variety of assets, including real estate, stocks, bonds, and collectibles. It can be set up at a bank or brokerage company and only requires the minor's social security number and a custodian named to manage the account.
UTMA accounts are often used to gift life insurance policies to minors. Under a state's UTMA, an adult can designate that the proceeds from their life policy are paid to a custodian for the benefit of their minor child. The custodian holds and manages the gift on behalf of the minor until they reach the age of majority. At that point, there are no restrictions on how the money and property can be used.
It's important to note that a custodian is not necessarily the same as a guardian. In the event of a parent's death, the guardian is the person who is supposed to physically care for the child. However, a custodian is the person chosen to manage their money. While the guardian may be a parent, this person might not be who you would choose to manage a large sum of money or assets.
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A minor can be a donee of a life insurance policy
The Uniform Transfers to Minors Act (UTMA) allows an adult to transfer assets to a minor by opening a custodial account for them. This type of account is managed by an adult, known as a custodian, who holds onto the assets until the minor reaches a certain age, usually 18 or 21. A custodian is not necessarily the same as a guardian. While a guardian is the person who will physically care for a child in the event of their parent's death, a custodian is the person chosen to manage their money.
Under the UTMA, an adult may make a gift of a life insurance policy indirectly to a minor, regardless of age, by designating a custodian to receive, hold, and manage the gift on their behalf. This means that a minor can be a donee of a life insurance policy. In the state of New York, for example, a minor below the age of 14 years and six months may be a donee of a life insurance policy pursuant to the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA).
A UTMA account can hold a wide variety of assets on behalf of a minor, and once the minor comes of age, there are no restrictions on how the money and property can be used. A UTMA account can be set up at a bank or brokerage company and requires only the minor's social security number and a custodian named to manage the account.
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Frequently asked questions
UTMA stands for Uniform Transfers to Minors Act. It allows an adult to transfer assets to a minor by opening a custodial account for them.
A custodial account is an account that is managed by an adult (the custodian) who holds onto the assets until the minor reaches a certain age, usually 18 or 21.
A custodial account can hold a wide variety of assets, including money, property, stocks, bonds, and collectibles.
A UTMA account can be set up at a bank or brokerage company. You will need the minor's social security number and a custodian named to manage the account.
