Definition: UGMA is an abbreviation for the Uniform Gift to Minor's Act and most often refers to an account set up to hold assets for a minor.
For years, UGMA and UTMA accounts were the primary vehicle used by most parents to save for a child's college education.
Investing through a UGMA account often has a sizable tax benefit over investing in a parent's name. There are strict rules about how the money may be used and at what age it must be completely turned over to the child.
UGMA accounts usually have a title the reads something like: John Doe Sr., Custodian for John Doe Jr., under the Uniform Gift to Minor's Act Until Age 18.
Pronunciation: ugg-muh
Also Known As: utma, custodial accounts, kiddie tax accounts, kid's accounts, college accounts
