Uniformed Gifts to Minors Act (UGMA)

June 3, 2025

The Uniformed Gifts to Minors Act (UGMA) allows individuals to give assets to underage beneficiaries. This account functions as a type of custodial account designed to hold and protect assets for the beneficiary.

The donor can appoint themselves, another person, or a financial institution in the role of the custodian. The custodian has a fiduciary duty to manage the account in the best interests of the beneficiary.

An UGMA account is usually only able to invest in publicly traded financial assets (stocks, bonds, ETFs, mutual funds, etc.), you cannot invest in speculative instruments, derivatives, or buy on margin.

These accounts can be opened through a bank or brokerage institution. Friends and family can make contributions to the accounts, with no contribution limits or income limits.

These deposits are irrevocable, which means they become permanent transfers to the minor and the minor’s account.

The main reason people open a UGMA account is to fund a child’s education. However, the donor can make withdrawals (penalty free) for almost any expense that benefits the minor.

Since the assets within the UGMA account are technically owned by the minor, they do count as assets if they apply for federal financial aid for college.

Once the minor reaches the age of majority in their state, they are granted full access to the UGMA account. At this point, they can use the funds as they please.