How to Make a UTMA Gift

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By Joshua Kennon. Investing for Beginners Expert

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(1) If the subject of the custodianship is property for which a conveyance is filed with a recorder of deeds, property for which a certificate of ownership or similar title instrument is issued by an agency of any state or of the United States, property which is maintained in registered name, property which is evidenced by a written instrument, or property which is deposited in an account with a broker or financial institution, by executing a deed, assignment, endorsement or other appropriate writing placing the property in the name of the designated custodian followed in substance by the words: "as custodian for. (name of minor) under the Missouri Transfers to Minors Law";

(2) If the subject of the custodianship is money or an unregistered security, by having it paid or delivered to a broker or financial institution for the account of the person designated custodian followed in substance by the words: "as custodian for. (name of minor) under the Missouri Transfers to Minors Law";

(3) If the subject of the custodianship is a transfer of property by the irrevocable exercise of a power of appointment or a transfer of an irrevocable present right to

a future payment, by giving written notice to the holder of the property or payment obligor that the property or right is transferred to the person designated custodian followed in substance by the words: "as custodian for. (name of minor) under the Missouri Transfers to Minors Law";

(4) If the subject of the custodianship is to be a future transfer of property under a will, trust, deed, power of appointment, benefit plan, life or endowment insurance policy, annuity or other contract, or a pay or transfer on death direction, by making the gift or beneficiary designation in the name of the designated custodian followed in substance by the words: "as custodian for. (name of minor) under the Missouri Transfers to Minors Law", or by naming the minor as beneficiary of the gift and providing for alternate distribution of the property to a custodian for the minor under sections 404.005 to 404.094 in the event the beneficiary is a minor at the time the property becomes transferable; 

(5) If the subject of the custodianship is property not described in subdivision (1), (2), (3) or (4) of this subsection, by causing the property to be placed in the name of the designated custodian by a written instrument in substantially the form set forth as follows:

This is fairly straightforward.  If, for example, you wanted to gift a parcel of land, you would simply have it re-titled "John Smith as custodian for Jane Smith under the Missouri Transfers to Minors Law".  As long as the land value was less than the gift tax exclusions in force at the time, you could avoid paying gift taxes on the the transfer.  If you are married, you and your spouse can double up on your gift tax limitations to gift twice as much value to the child under UTMA (e.g. in 2014, you can make a tax-free gift of up to $14,000 per person, per year; were you married, you and your spouse could make a combined gift of up to $28,000 per person, per year).

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Families with a lot of wealth may want to consider gifting limited partnership units under UTMA to take advantage of liquidity discounts.

Source: beginnersinvest.about.com

Category: Insurance

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