Series 7 practice questionmediumAccount Types — UGMA/UTMA Restrictions
Which of the following statements about UGMA/UTMA custodial accounts is TRUE?
- AGifts to the account are revocable at any time by the donor
- BThe account may have multiple custodians simultaneously
- CGifts to the account are irrevocable, and the assets belong to the minor✓ Correct answer
- DThe custodian may borrow from the account for personal use
Explanation
Why C — Gifts to the account are irrevocable, and the assets belong to the minor
Gifts made to a UGMA or UTMA custodial account are irrevocable, meaning the donor cannot take the gift back once it is made. The assets legally belong to the minor. Additionally, there can only be one custodian and one minor per account, and the custodian may not use the assets for their own benefit.
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