Uniform Transfers to Minors Act (UTMA)

Transfers to minors can pose significant challenges. Many transferors do not want to place valuable property in the control of minors, and third parties often do not wish to deal with minors. UTMA is a law that allows transfers to be made to minors without the need for a formal guardianship or trustee. Under UTMA, property can be transferred to a minor through the use of a custodianship. The custodian of the property is an adult or appropriate institution who maintains custody of the property that would otherwise transfer directly to a minor. The custodianship remains until the minor becomes 21, at which point the property is transferred into the minor’s name. The custodial relationship is created by executing a simple document which is provided in the Act itself. The custodian has certain statutory authority to deal with the property on the minor’s behalf, and third parties have no occasion to be uncertain about dealing with the custodian.

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Reference: Uniform Transfers to Minors Act (UTMA)