But in other states, the age of majority is either 18 or 25. It's important to note that the age of majority is slightly different in each state. It allows minors to receive gifts and avoid tax consequences until they become of legal age for the state, which is typically age 18 or 21. Because money placed in an UGMA/UTMA account is owned by the child, earnings are generally taxed at the childsusually lowertax rate, rather than the parents rate. Under the age of 18 is typically classified as a minor, meaning that anyone under this age is not legally allowed to enter into contracts or make major decisions on their own. In most states, the age of majority is 21 which means that when a child turns 21, the custodianship of assets will end. Necessary cookies are absolutely essential for the website to function properly. However, in some states, an UTMA takes longer to mature.. You also have the option to opt-out of these cookies. How to Market Your Business with Webinars. You can learn more about that here.). For some families, this savings can be significant. Tennessee bans transgender procedures for minors two days after It does not store any personal data. Well dive a bit deeper into the rules in just a minute. Was Benjamin Franklin American or British? There are no limits on the dollar amount of gifts or transfers that can be made to an UGMA or UTMA, but amounts above $17,000 per year ($34,000 for a married couple filing jointly) will incur federal gift tax. Assets you have transferred into a UTMA are irrevocable gifts; you can't change your mind and take them back. Some states allow the custodian of a UTMA account to extend the age at which the minor child is entitled to receive the assets. The two custodial account types are UTMA accounts (named after the Uniform Transfers to Minors Act) and UGMA accounts (after the Uniform Gift to Minors Act). If your child has reached the age of majority, they have rightful ownership of the assets.
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