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A uniform transfer is a shorthand way to describe the laws that allow you to transfer securities and other assets automatically without going through a lengthy legal process.
Why does this matter?
Because uniform transfers offer ways to pass on wealth without some of the constraints otherwise imposed by state gift and probate laws. Most states have adopted their own versions of the Uniform Transfer-On-Death Account Security Registration Act (TOD), Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA). With a TOD transfer, for example, the named beneficiary immediately becomes the legal owner of the securities upon the death of the original owner without the need for an order from the probate court.
Education can contribute to a successful transfer.
Keeping beneficiaries and minors educated about the investments they are likely to receive is an important part of investment stewardship. For instance, making your spouse aware of your investments, including key documents and account information, is important preparation in advance of a transfer-on-death. If securities are transferred to a minor and held in a UTMA or UGMA account, the custodian has a fiduciary duty to invest the property prudently. And while the minor has the right to use the proceeds of the account when he or she reaches majority (from 18-25, depending on the state), educating young people about investing can help them avoid mistakes that could derail financial independence.
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