What is Custodial accounts for minors?
In short
Accounts under the Uniform Transfers to Minors Act (UTMA) or the older gifts to minors act hold assets for a child under an adult custodian. The gift is complete, and the child gets control at an age set by state law, usually 18 to 21.
Key takeaways
- Income is taxed to the child, subject to the kiddie tax.
- Gifts qualify for the gift tax annual exclusion.
- They count as the student's assets for financial aid, reducing aid more than parental assets.
Where it's tested
TCP: Personal Financial Planning — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An employee receives disability benefits under a policy for which the employer paid all premiums and excluded them from the employee's taxable wages. How are the benefits taxed?