you ask about an UGMA (UGH-MA )

Uniform Gift to Minors (UGMA)

A Uniform Gift to Minors (UGMA) otherwise known as an UGH-MA is an account you can set up for your children or and underage person. The IRS allows you to transfer (gift) up to $11,000 per child. It is simple for your broker to set up and does not involve any lawyers. The advantages are that the money is taxed at the child’s rate under the child’s social security number. You can establish and account for anyone underage ,a grandchild and god child and nephew and so on .You are the custodian and make all decisions related to the account until the child comes of age, which in most states is 18. Once the minor reaches legal age they take control of the account and it is there to do as they please yes that means anything so Paris Hilton watch out. As custodian you act as the fiduciary which means you have to handle the money in a “prudent manner” so margin, futures trading, horse racing and sports betting are probably not OK.

James
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