Are UGMA Accounts taxable?

Many custodial accounts are Uniform Gift to Minors Act or Uniform Transfer to Minors Act accounts. These are taxable brokerage accounts. UGMA accounts allow adults to give minors cash or securities. UTMA accounts are similar, but they also allow transfers of real estate, art and other assets not permitted in a UGMA account.

What is a UGMA & UTMA account?

UGMAs, UTMAs and More Custodial accounts allow you to open and manage an investment or savings account on behalf of a minor. You are the account custodian until the minor reaches the age of majority in their state. They can be used to help a child learn how to invest, or for wealth transfer.

What does UGMA stand for?

The state legislation that allows for gifts to children is the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). One or both of those acronyms are often associated with custodial accounts. Sign up for Fidelity Viewpoints weekly email for our latest insights.