UTMA account

What It Means

A UTMA account is a custodial accountCustodial accountAn account an adult manages for a minor, usually under state UGMA or UTMA law, where the money legally belongs to the child from the day it goes in. See more created under a state's version of the Uniform Transfers to Minors Act. An adult custodian holds and manages the assetsAssetsThings you own that are worth money, such as cash, investments, a home or a car. Your assets minus your debts is your net worth. See more for a child, and FINRA notes it can hold virtually any kind of property, including real estate, where the older UGMAUGMA accountA custodial account under a state's Uniform Gifts to Minors Act, holding cash, securities or insurance policies for a child until they come of age. See more is limited to cash, securities and insurance. Every gift into it is irrevocable, and the child takes control when the custodianship ends at an age set by state law.

How People Say It

• "Her grandparents set up a UTMA when she was born."
• "The UTMA turns over to him at 21 in our state."
• "Can a UTMA hold the lake cabin?"

The Breakdown

Worked example. Two grandparents each want to give their grandson $1010,000 stepsA popular daily step goal that began as the name of a 1960s Japanese pedometer; later studies find health benefits begin well below it. See more,000 this year through his UTMA account.

Each gift is under $19,000, so neither giver goes over the 2026 exclusion with this gift. If one of them gave $25,000 instead, $6,000 would be over the line, and that giver may need to file a gift tax return; the IRS Estate and Gift Tax FAQs explain how.

What the result means. The money is now the grandson's, for good. The custodian decides how it's invested and spent for his benefit, and at the transfer age in their state he takes control of whatever is there.

What a UTMA can hold, per FINRA

• Cash and bank deposits
• Stocks, bonds and mutual fundsMutual fundAn SEC-registered fund that pools money from many investors to buy stocks, bonds or other securities, with shares you can sell back to the fund each business day. See more
• Insurance policies
• Real estate and virtually any other kind of asset

Good to Know

The age when the account passes to the child is set by state law and differs by state, so check your state's rule before opening one. On the FAFSAFAFSAThe Free Application for Federal Student Aid, the U.S. Department of Education form a student files each year to apply for federal aid for college or career school. See more, the 2026-2027 Federal Student Aid Handbook counts a UTMA owned by the student as the student's asset. Bank deposits inside a UTMA are insured by the FDIC as the child's single account, up to $250,000 per bank. For 2026, the IRS gift exclusion stays at $19,000 per recipient.

Related Terms and Categories

• UGMA account

  A custodial account under a state's Uniform Gifts to Minors Act, holding cash, securities or insurance policies for a child until they come of age.

• Custodial account

  An account an adult manages for a minor, usually under state UGMA or UTMA law, where the money legally belongs to the child from the day it goes in.

• 529 plan

  A state-sponsored, tax-advantaged account for education costs, where growth is free of federal income tax when spent on qualified expenses.

• Kids savings account

  A bank or credit union savings account opened for a child, usually jointly with a parent or as a custodial account, where the child's money earns interest.

• Generational wealth

  Money, property and other assets passed from one generation of a family to the next, through inheritances, gifts during life or help such as paying for school.

• Custodial Roth IRA

  A Roth IRA opened by a parent or other adult for a minor who has earned income, managed by the adult until the child comes of age.

Saving and investing basics