SIE Knowledge of Capital Markets Question 33: Answer and Explanation

Question: 33

Which of the following statements is true regarding a Uniform Gift to Minors Act (UGMA) account?

• A. An attorney is required.
• B. Only a person other than a parent may give investments to the beneficiary.
• C. Only a parent may give investments to the beneficiary.
• D. The trustee may be a natural person or a business or an organization.

Correct Answer: D

Explanation:

D: Choice D is correct because the UGMA trustee can be one of a wide range of possible individuals or organizations. Choice A is incorrect because, while an attorney may be involved, a UGMA account at a bank for investment firm may be opened with the trust named in the registration, and the beneficiary stated as the minor, with no attorney involved. Choice B is incorrect because a parent may gift items to the minor child. Choice C is incorrect because the donor need not be a parent of the beneficiary.