Are UGMA And UTMA Accounts Good Choices For College Saving Plans?

UGMA and UTMA are two options for minorities to finance their college education in the United States.  Precisely UGMA is an abbreviation of United Gift to Transfer Act while UTMA encapsulates United Transfer to Minor Act.  It is only recently that other ways to finance college education have been introduced, pertaining to the greater demand for funds.  Nevertheless the UTMA and UGMA saving options were the only available choices in the arena of providing funds for college education.  

As a result, many of the investors have invested in these accounts as compared to other saving plans and accounts.  As far as some benefits or 'comparative advantages' (as they like to say in the corporate culture) of UTMA and UGMA are concerned, these accounts do not have any kind of restraints in the income or contribution dimension.  

Moreover part of the earnning made from these accounts is even exempt from Federal Income Tax.  However some of it would be taxed, which would take place if the child is under 18 years.  Furthermore the UTMA and UGMA funds are not just reserved for college education funds.  It could also be utilized for other benefits concerning the child.  On turning eighteen, the child assumes the control of the account.