Kutchins, Robbins & Diamond, Ltd. Certified Public Accountants and Advisors

Assets in Minor’s Name – Tax Strategy Alternative

Many of us use the Uniform Gifts to Minors Act (UGMA) to hold money or other property for a minor child that otherwise would not be able to be held in their name.

This is primarily a way to hold title to assets, it is not a tax strategy.  In general the kiddie tax applies to the unearned income (interest, dividends and capital gains) of a full time student under age 24.  The kiddie tax rates are compressed and do not provide a significant savings.

However, what happens when the minor child turns 18?  Technically they are in control of the money or other property.

Consideration should be given to using a Family Limited Partnership (FLP) as an alternative.  This vehicle offers some advantages:

  • Simplifies estate planning
  • Ease of systematic transfers
  • Maintenance controls past age 18
  • Offers creditor protection
  • Can act effectively as part of pre-nuptial planning
  • Valuation discounts on gifts

Our experienced KRD professionals can help implement plans for gifting, estate planning and wealth transfers. Contact us today to learn more. 


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