Should I open a UTMA for my child?

Unlike with a 529 plan, the funds in a custodial account do not have to be used solely for higher-education expenses. Because they can be used for a wide array of expenses, you can use the money in the account even if your child chooses not to go to college. …

Who can contribute to a UTMA account?

Anyone can contribute to an UGMA/UTMA account, including grandparents, relatives, friends, and even the child. And there are no income restrictions limiting how much any of these individuals may give.

How do I get a UTMA account?

To establish a custodial account, the donor must appoint a custodian (trustee) and provide the name and social security number of the minor. The donor irrevocably gifts the money to the trust. The money then belongs to the minor but is controlled by the custodian until the minor reaches the age of trust termination.

Can a parent withdraw money from a UTMA account?

Under the Uniform Transfers to Minors Act (UMTA), money deposited into a UTMA account cannot be withdrawn for any reason—except by the child at the appropriate age. In the United States, a child’s money does not belong to the child’s parents or guardians. If you’re thinking about spending your child’s UTMA money, think again.

How old do you have to be to have a UTMA account?

Although the child is recognized as the owner of the UTMA account, they can’t access the assets until they reach legal age, typically 18 or 21 depending on the state.

When to cash out a UTMA or UGMA?

The child is the beneficiary of a UTMA/UGMA account. Each state has adopted its own version of these accounts, but generally, beneficiaries can access their UGMA money at age 18 and UTMA cash at age 21.

Can a minor change the beneficiary of a UTMA?

UTMA accounts provide a way to gift money to minor children. Contributing funds to UTMA accounts constitutes an irrevocable gift. Once you gift the funds, they must be managed for the benefit of the minor and you cannot change the beneficiary.