Course 210: How to Invest for College
Uniform Gifts to Minors Act
In this course
1 Introduction
2 What You'll Need
3 Choosing a College-Saving Plan
4 Education Savings Account
5 Section 529 Plans
6 State Prepaid Education Plans
7 Traditional IRAs
8 Roth IRAs
9 Uniform Gifts to Minors Act
10 Turn Tame When the Time Is Right

Most states have variations on the UGMA (sometimes called a UTMA), which allows anyone to transfer ownership of assets or an investment to a minor.

  • You can contribute up to $13,000 in 2012 to a UGMA account, $14,000 in 2013.
  • You can transfer cash, any mutual fund or stock, or property to the account.
  • Withdrawals are taxed at the recipient's rate.
  • The money belongs to the recipient, not to you. You can, however, act as a custodian until the recipient reaches a set age. That age varies from state to state.
  • UGMAs can be used for anything (except parental obligations), not just college costs.

The biggest problem with the UGMA is the control you surrender. If junior would rather spend the account on a new car rather than college, he can. It's his money.

Next: Turn Tame When the Time Is Right >>


Search
Print Lesson |Feedback
Del.icio.us Del.icio.us | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2010 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.