Why is a UGMA useful? The UGMA/UTMA offers a simple possibility for minor securities. In most (all?) States do not have the right to minors to have a contract. A minor could not therefore be bound by a broker`s account contract. If a broker took a minor`s account, the miner, if he or she had reached the majority, could refuse all the losing trades and encourage the broker to eat them. For example, brokers and fund companies have refused to take smaller accounts. UGMA/UTMA was basically a way to provide a form of ownership that came around this problem without forcing people to get through the fees, to create a special trust lawyer. While UTMA offers the possibility of setting up a tax-exempt savings account for minor children, the assets are counted as part of the custodian`s taxable estate until the minor takes possession. You use the minor`s social security number as a tax identifier for this account. If you fill out the W-9 form for this account, this form will be posted. The administrator should certify the W-9 form. The agent can transfer funds between UGMA/UTMA accounts as he sees fit. This can be attractive, for example, when a UGMA appears to be under-contributing to similar accounts or if it does not have the services of other UGMA accounts such as online access.
The custodian manages the funds on behalf of the minor and a part of the management decides where the funds are placed and with which bank, broker or other agent. The custodian must be sure to keep a piece of paper showing that every dollar withdrawn from one account has been transferred to another account. If the UGMA account is with a broker or investment fund manager and a transfer is requested, contact the new broker or manager and they will arrange all documents for a direct transfer. You can use these HTML tags and attributes:
The Uniforme Gifts to Minors Act (UGMA), replaced by the uniform Transfers to Minors Act (UTMA) is simply a way for a minor.