Uniform Gifts to Minors Act (UGMA)
Definition - What does Uniform Gifts to Minors Act (UGMA) mean?
The Uniform Gift to Minors Act, which is commonly referred to as UGMA is an act followed in some states of US. Under this act, certain types of assets can be held under the custodian’s name until the minor comes of age. These assets can be held without any need of setting up trust funds. Once the child is of the majority age, he or she gets all of the rights to the property and can use it in any way he likes.
Justipedia explains Uniform Gifts to Minors Act (UGMA)
The gift tax can be applicable if someone wishes to contribute to the UGMA account on behalf of someone else. It is important to mention that the custodian is usually chosen by the donor and the gifts made must be during the lifetime of the donor and not after his death.