Uniform Gift to Minors Act. Laws adopted by most states allowing an adult to contribute to a custodial account in a minor's name without having to establish a trust or name a legal guardian. Thus, minors can have securities bought and money invested in their names, but the custodian is responsible for managing the funds in the account. The custodian has a fiduciary duty to manage the account prudently, but once the minor reaches the age of majority, he/she has complete rights to the funds in the account. The assets are the legal property of the minor, and the parent has no legal control over the uses of the proceeds of the account.
All withdrawals from the account are taxed at the minor's rate. Putting money into a UGMA account can negatively impact the chances for financial aid, since financial aid officers weigh children's assets much more heavily than parents' assets.

Use UGMA in a sentence

I was glad the UGMA was in place because it allowed me to contribute a custodial account to Dave, who was a minor.

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Sal's great uncle had provided an account for him when he was just a baby and by abiding by UGMA, Sal could not access it until he turned 18.

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We received several gifts upon the birth of our daughter which we deposited into a brokerage account established under the Uniform Gift to Minors Act (UGMA).

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