Dictionary of Banking Terms: uniform gift to minors act
uniform gift to minors act
law adopted in most states allowing transfers of property to a minor, supervised by an adult, usually a parent, acting as a custodian. Gifts to minors must be irrevocable, and are taxed to the minor, not the donor. The custodianship ends when the child reaches legal age.
Interest and dividend income earned by a child exceeding $1,000 is taxable, under the Tax Reform Act of 1986, at the highest tax rate of the parent. This is the so-called kiddie tax, intended to discourage transfers of assets to avoid paying taxes.
