Uniform Gifts to Minors Act
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Search complete. 65 mentions across 22 episodes found for "Uniform Gifts to Minors Act".
Sep 10, 2026
Marielle SegarraHOST
What other kinds of investment accounts might parents consider for their kids?
Andy TagleCORRESPONDENT
So next up is two different types of custodial brokerage accounts, the UTMA and the UGMA, or Uniform Transfers to Minors Act and Uniform Gifts to Minors Act accounts.
Andy TagleCORRESPONDENT
You still with me?
Marielle SegarraHOST
I have to say UTMA and UGMA sound like, like two trolls under the bridge that you have to, like, solve these riddles three.
Marielle SegarraHOST
Do you get where I'm going with this?
Andy TagleCORRESPONDENT
Yes, absolutely.
Andy TagleCORRESPONDENT
Okay, so our friends UTMA and UGMA, they are custodial brokerage accounts [laughs], um, and, uh, they're invest- which means they are investment accounts opened and managed by parents on behalf of a child.
Andy TagleCORRESPONDENT
You can use them for medium to long-term savings.
Elizabeth AyoolaHOST
I was just playing around with a calculator to see if I'm on track for saving enough for my son's college education, and to be quite honest, not really, [laughs] you know? But he still is going to have a good chunk of money for me to give to him, and I'll continue to increase the contributions as I go along.
Elizabeth AyoolaHOST
Something else I wish that I did was open an UTMA or UGMA account for him earlier.
Elizabeth AyoolaHOST
During the pandemic when some of us got that stimulus check, I opened an account for him and put that in there, and it's more than doubled now.
Elizabeth AyoolaHOST
So that's just to remind you guys the importance of saving early.
Andee TagleGUEST
next up is two different types of custodial brokerage accounts.
Andee TagleGUEST
The UTMA and the UGMA.
Andee TagleGUEST
Or...
Andee TagleGUEST
Uniform Transfers to Minors Act and Uniform Gifts to Minors Act Accounts.
Andee TagleGUEST
Are you still with me? I have to say
Mariel SegarraHOST
UTMA and UGMA sound like two trolls under the bridge that you have to solve these riddles three.
Andee TagleGUEST
Do you get where I'm going with this? Yes, absolutely.
Andee TagleGUEST
Okay, so our friends UTMA and UGMA, they are custodial brokerage accounts, which means they are investment accounts opened and managed by by parents on behalf of a child.
speaker_5HOST
And mechanically, this is very easy to do today.
speaker_5HOST
You go online and open a custodial brokerage account, often called an UGMA or UTMA account, depending on your state.
speaker_5HOST
It takes 10 minutes.
speaker_5HOST
The money belongs to the child, but you control it until they are an adult.
Mariel SegarraHOST
What other kinds of investment accounts might parents consider for their kids? So
Andy TegelCORRESPONDENT
next up is two different types of custodial brokerage accounts, the UTMA and the UGMA.
Andy TegelCORRESPONDENT
or Uniform Transfers to Minors Act and Uniform Gifts to Minors Act Accounts.
Andy TegelCORRESPONDENT
Are you still with me? I have to say
Mariel SegarraHOST
UTMA and UGMA sound like two trolls under the bridge that you have to solve these riddles
Andy TegelCORRESPONDENT
three.
Andy TegelCORRESPONDENT
Do you get where I'm going with this? Yes, absolutely.
Andy TegelCORRESPONDENT
Okay, so our friends UTMA and UGMA, they are custodial brokerage accounts, which means they are investment accounts opened and managed by... by parents on behalf of a child.
Brad BarrettHOST
So I think the next are two of the major I guess brokerage accounts is how I conceptualize it, but I'm curious how you guys do it.
Brad BarrettHOST
These are very similarly acronyms here or initials, the UTMA and the UGMA.
Brad BarrettHOST
I think a lot of people get confused with what the distinction is, first off, and what these asset accounts are.
Brad BarrettHOST
Cody, you want to start with this one?
Cody GarrettGUEST
Sure.
Cody GarrettGUEST
So these are called the Uniform Transfers to Minors Act or Uniform Gifts to Minors Act accounts.
Cody GarrettGUEST
The UTMA or the UGMA, U-T-M-A, U-G-M-A.
Cody GarrettGUEST
Let's simplify this and just say it's a custodial account.
Robert FarringtonHOST
That includes girlfriend, fiance, their family, your family.
Robert FarringtonHOST
Do not co-sign custodial UTMA, UGMA accounts before anything else, student assets on the FAFSA at 20%, no protection, and any lifestyle inflation.
Robert FarringtonHOST
Avoid those things.
Robert FarringtonHOST
All right, so here's how NIL money impacts financial aid.
speaker_0HOST
But Levine's text outlines a catch that I think requires a blaring warning siren.
speaker_0HOST
I look at the UGMA account as building a massive, beautiful sandbox for a child, but intentionally refusing to build a fence around it.
speaker_1HOST
That's a great analogy, a wonderful tool while they are young and playing exactly where the custodian directs them.
speaker_0HOST
But the absolute defining legal reality of a UGMA or UTMA is that the assets are held irrevocably in the minor's name.
speaker_1HOST
The irrevocability alters the entire risk profile.
speaker_1HOST
The money ceases to belong to the adult the moment it enters the account.
speaker_0HOST
Beyond the sheer behavioral risk of handing a teenager a liquid windfall, there is a systemic structural risk embedded in these accounts that Levine calls out.
speaker_0HOST
I call it the FAFSA trap.
Tom MosleyHOST
But for my daughter who went to Oregon and it was cold up there, they looked awfully warm.
Tom MosleyHOST
But a UGMA or a UTMA, those are flexible spending.
Tom MosleyHOST
It's not limited just to education.
Tom MosleyHOST
You can put that money.
Tom MosleyHOST
And once they legally belong to the child, once they're no longer a minor, they become that child's property and they could be used for anything other than education or something other than education.
Tom MosleyHOST
The best use of those, not a lot of use for those compared to some of the others, but people who want flexibility with those educational expenses or maybe buying a car.
Tom MosleyHOST
I've seen UGMAs used for some down payments on houses and different things like that.
Tom MosleyHOST
So a lot of flexibility there.
Adam Van DusenHOST
The child gets control at that age.
Adam Van DusenHOST
So, you know, despite the tax penalties for taking an early withdrawal, the penalties and taxes, as you mentioned, you know, they could decide to buy a car, they can do whatever with it, you know, much more similarly to the UGMA account, just with more penalties.
Adam Van DusenHOST
So there's kind of two sides to this.
Adam Van DusenHOST
One is the parent wants the child to use this account for retirement but the child's actually going to have to follow through on using it for retirement is that correct
6 MINS LATER
Ben Henry-MorelandGUEST
So you're often not using, you're not necessarily using retirement accounts in this case, because a lot of the things that parents are going to be giving to their kids for are not going to qualify for those exceptions.
Ben Henry-MorelandGUEST
And so you want to be able to use something that's a little bit more flexible.
Ben Henry-MorelandGUEST
So sometimes this is where children, parents, if they want to start Giving for these purposes at an early age, they might start putting money into an UTMA, UGMA sort of taxable custodial accounts.
Ben Henry-MorelandGUEST
The downside here is that the child can use this for any purpose once they hit the age of 18.
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