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A type of account where a custodian or investment advisor manages and oversees (acts as custdodian) an investment account for a minor. The state laws vary when it comes to taxation and majority age.
Most major brokerage firms and financial advisors can help set up a UGMA account.
The investments cannot be bought on margin and the custodian cannot sell short securities. All securities are bought in a cash account. The custodian does not have to be a relative or legal guardian to oversee the investment management of a Uniform Gift To Minor trust.
Donor - Custodian
A donor may make a gift to a custodial account for the benefot of a minor child. The parent or custodian may retain responsibilty of management of the assets in the account subject to the terms of the act. The donor may choose to contribute from a number of assets in the UGMA, including stocks, bonds and mutual funds. The funds can be used for education or other needs.
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For more on custodial or minor accounts, see Custodian
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