Uniform Gifts/Transfers to Minors Act UGMA UTMA

Ace your homework & exams now with Quizwiz!

Donor should consider:

1. *completion of transaction* of securities occurs when: -*securities are registered in NAME OF CUSTODIAN* - for the *benefit of the minor* 2. age of the person 3. gift is *irrevocable* 4. certain states permit gifts of: -money -life insurance policies -annuity contracts 5. **cannot make gift through last will & testament (inheritance)** 6. **donor does NOT have to pay capital gains taxes on donated securities**

Custodian

1. *turn over all custodial property to minor at age of majority* 2. *legal title is invested in minor* and cannot be revoked. 3. must manage account for *best interest of minor* -(purchase & sale of securities and exercising of subscription rights) 4. collect, hold, manage, invest, re-invest custodial property 5. may use custodial property as: -support -maintenance -education -general use & benefit of minor 6. permitted to: -*receive compensation* for reasonable services, (unless custodian is the donor) -*receive reimbursement* for necessary expenses 7. not required to file a fiduciary tax return

Custodian Account for UGMA account limitations

1. Not allowed -*securities purchased on margin* -*Short sales* 2. *cash proceeds* from sales or dividends: -may be held if they are going to be *reinvested* 3. transfer agent is given *MINOR's SS number* 4. taxation is higher of: -*parent's top marginal rate* -*child's rate* ex: -unearned income OVER $1900 for 2011 and 2012 for a child UNDER 18 will be taxed to the child at a rate at which it would be taxed if it were added to the *PARENT'S top marginal rate, if the rate is HIGHER than the child's rate*

Custodian Account for UGMA account

1. ONE person as custodian 2. ONE minor as beneficiary 3. opened with *MINOR'S social security* 4. only *NEW gifts* permitted -*(property already owned by minor may not be given)* 5. *stock certificates* must be -*registered in the name of the custodian* as custodian -(not as trustee or guardian) 6. *registration of securities completes the gift* 7. cash, securities, life insurance, and annuities may generally be transferred into the acocunt 8. *custodial property* may be used for the benefit of the minor

Uniform Gifts to Minor's Act/ Uniform Transfer to Minors Act UGMA/UTMA

1. created ability to have an account that: -*allows minor to own securities* 2. used to give cash to a minor 3. *without involving attorney* to establish a special trust 4. *minor becomes responsible for taxes* -*any account that includes an adult and a minor must be set up as a UGMA account, not a joint account*

Custodian orders

1. if custodian is not the guardian: -*guardian cannot exert control or orders in account* -ex: if uncle is custodian for nephew, parents do not have any say 2. *checks*: -*never drawn in custodian's own name* 3. transaction can only be *executed by the custodian*

Custodian retains control until:

1. minor attains majority: cash & securities distributed 2. custodian is removed by court order 3. custodian dies: successor is appointed 4. *If minor dies: proceeds payable to minor's estate*

Donor

1. must be an adult 2. give any kind of securities or cash, including mutual fund shares 3. *only fully paid securities may be gifted* 4. *no limit on size of gift* 5. *appoints custodian for account* 6. permitted to *designate themselves as custodian*


Related study sets

Chapter 3: Corporate Social Responsibility

View Set

Healthcare professionals (Metabolic Syndrome and Related Conditions)

View Set

Chapter 2: Practicing Entrepreneurship

View Set

271-12-4 Using Positive and Negative Numbers, Decimals, and Fractions

View Set

21-23 Cryptography and Endpoint Protection Group Exam

View Set

Chp 38: Care of Survivors of Abuse and Violence

View Set

Saunders Fluid & Electrolyte Practice Questions-EXAM 2

View Set

Abeka American Literature App Quiz HH

View Set

NUR 424 MEDSURG QUIZ on Immune Deficiency (chapter 36)

View Set

Nurse Practice Act and Legal Liability

View Set

Geology Chapter 7 - Sedimentary environments and rocks

View Set