This law, adopted by most states, sets up rules for the distribution and administration of assets in the name of a child. Though it varies in each state, the act requires a custodian of the assets – usually one parent but may be an independent trustee. (It can only be one person). It is used in the securities industry as a qualifier to indicate accounts and securities purchased or sold under the provisions of the law. A gift to a minor is irrevocable. When a minor reaches majority, UGMA accounts become the child’s property.
Unit investment trust
This consists of units of an existing portfolio of long-term bonds that are deposited with a trustee. The trust becomes an unmanaged entity, and securities are not added or deleted once the initial pool is acquired. All interest income received by the bond portfolio (and eventually the face values upon maturity) is paid by the trustee to shareholders. Often these trusts contain low credit quality issues, issues with extremely long maturities, and often adverse call features that allow the issuer to pay-off the bonds early (usually when rates are low).
Universal life insurance
A type of life insurance under which the certificate owner has considerable flexibility in changing the death benefit, coverages or premium payments. Net premiums are applied to the account value, which is increased with interest and reduced by the cost of insurance and any certificate fees. This is often shortened to UL.