UGMA and UTMA accounts

What it means

A custodian manages the account for the child's benefit. The money belongs to the child from the moment it is given, and the gift cannot be taken back.

At the age of majority for that state's Act, the account is handed over in full, with no conditions.

The Uniform Transfers to Minors Act replaced the older Uniform Gifts to Minors Act in most states and allows a wider range of property.

Why it matters

It is the simplest way to leave money to a child and the least controlled: at a fixed age, they receive everything with no restriction.

It also counts as the child's own asset, which can affect student aid, and if a custodian dies a successor has to be appointed.

When you are likely to meet it

• When leaving money to a grandchild.
• When an account for a child is found after a death.
• When deciding between a custodial account and a trust.

How this varies by state

The age at which the child takes control, and which Act a state has adopted, are set by state law.

Related terms

• ABLE accountA savings account a disabled person can hold without losing means-tested benefits.
• Beneficiary designationA named person on an account or policy who receives it directly on death, without it passing through the will or probate.
• DependentSomebody who relies on you. It is a defined term in tax and in benefit programs, and it is not a category in inheritance law at all.
• Guardian nominationNaming, in a will, who should raise your children — or care for a dependent adult — if you cannot.
• Special needs trustA trust that holds money for a person with a disability without disqualifying them from means-tested benefits.
• Testamentary trustA trust created by a will, coming into existence only when the person dies.
• TrusteeThe person or institution that holds and manages trust property for the people it is meant to benefit.

Sahvelo guidance that uses this

• Beneficiary designations
• Wills and trusts