SIE practice questionhardAccount Types – Custodial/UGMA Accounts
A grandmother opens an UGMA account for her grandson and deposits securities. Who is responsible for making investment decisions and what happens when the grandson reaches the age of majority?
- ACustodian manages account; assets remain with custodian permanently
- BGrandson manages the account; assets remain with custodian at majority
- CCustodian manages the account; assets transfer to the child at majority✓ Correct answer
- DGrandmother manages account; assets transfer to child at majority
Explanation
Why C — Custodian manages the account; assets transfer to the child at majority
The custodian manages the UGMA account until the minor reaches the age of majority, at which point the assets transfer to the child. The minor cannot manage the account until then, and assets do not stay with custodian permanently.
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