The Uniform Transfers to Minors Act (UTMA) and The Uniform Gifts to Minors Act (UGMA) offers adults, typically parents, an opportunity to transfer assets to minors, similar to a trust, but without the expense of establishing one.  The assets are held in a custodian's name until the child reaches maturity. The UGMA and UTMA accounts are usually used to pay for college, but minors can use the funds to pay for such things as summer camps, books, computer/electronic hardware and cost of living expenses. The main difference between an UTMA and UGMA account is the kind of assets they hold. Allowable assets found in an UGMA account include bank deposits, stocks, bonds, mutual funds, and other securities and insurance policies. Assets within a UTMA typically include patents, royalties, real estate, and fine art. There are a couple of matters one should consider prior to setting up and funding an UGMA or UTMA account.

• Both UTMA and UGMA accounts rely on a custodian to manage the assets in the account on behalf of a minor beneficiary.
• All gifts made to an UTMA or UGMA account cannot be revoked. Unlike a trust, assets in these accounts are considered “completed gifts” and cannot be changed.
• When the beneficiary comes of age, the UTMA and UGMA accounts are completely under his or her control.
• Net unearned income from an UTMA or UGMA account is a key element in determining the kiddie tax. However, this tax is complicated. While the 2018 Tax Cuts and Job Act has lessened some of the past complexities, there are some new elements that make the computations increasingly difficult to determine. Before setting up one of these types of investment vehicles, It is wise to consult an accountant to assess the tax advantages.
• Financial aid is typically reduced by 20-25% of the UGMA or UTMA balance. Other college savings plans often have a smaller effect on financial aid. A 529 account, for example, has an average 5% effect on financial aid.

Saving early is one of the best ways to pay high tuition bills later on down the road. Establishing a college savings plan (529, Coverdell or UGMA/UTMA account) is a step in the right direction. Typically, parents who have not taken advantage of a college savings plan scramble to find resources to pay for tuition. They may consider a home-equity line of credit, they may draw on their investment accounts or borrow from their 401K, others may just not fund college for their children. Let us help you learn more about college savings plans and whether or not they are right for you!

As your child heads off to college, remember at 18 years old he or she is considered an adult.  As parents, you may want access to your child's health information. Talk with your son or daughter about HIPPA laws that require your child to formally release their health information to you particularly in an emergency. This is also the time to speak with your child about advanced directives/health care proxies in the event of a serious health issue that could render your child unable to communicate his/her wishes regarding health care. In addition, it is important to think about legal documents if there are financial accounts solely in the name of your child. Adding beneficiaries to individually held accounts is highly recommended.