UTMA Account

Personal Finance

Uniform Transfers to Minors Act (UTMA) accounts hold assets for a minor's benefit, with an adult custodian managing them until the minor reaches age of majority (18-25 depending on state). UTMA assets are legally the child's — count against financial aid (20% of student assets vs. 5.6% of parent assets in EFC calculations). No contribution limits but gift tax applies. UTMA earnings face 'kiddie tax' — unearned income above $2,600 (2026) taxed at parent's rate. Once the child reaches majority, they control the assets — no parental constraints. UTMAs are less tax-advantaged than 529s for education savings; consider 529 first.