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SIE practice questionhardAccount Types

A parent opens a custodial account under UTMA for a minor child. Which statement is true?

  1. AThe assets belong to the parent, and the child gains access upon turning 18.
  2. BThe assets belong to the minor, but the parent manages the account until the child reaches the age of majority.✓ Correct answer
  3. CThe minor can direct investments at any age.
  4. DThe account must be converted to a margin account once the child turns 18.
Explanation

Why B — The assets belong to the minor, but the parent manages the account until the child reaches the age of majority.

In UTMA accounts, the minor owns the assets, but the custodian manages them until the age of majority. The minor can't direct investments until legal age, and custodial accounts cannot be margin accounts.

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