A UTMA is an account formed under the Uniform Transfer to Minors Act. It can be opened as soon as a child is issued a social security number. The child is the owner of the account with an adult (usually a parent or grandparent) serving as the custodian of the account until the child reaches the age of majority - which is 18 or 21, depending on the state. It is a tax efficient account in that all capital gains and dividends are reported under the child’s social security number. While UTMAs are often used for education, they can be used for any expense for the child other than normal room and board that you are expected to provide as a parent. There is no requirement to spend the money by a certain age. At the age of majority, the adult child registers the account in their name and takes over control of the investments. They could even use the money for a down-payment on a house at that time for example. On the other, if someone has a spendthrift child, the custodian can spend down the money for their benefit before they reach the age of majority. Call us if you would like to know more details.
This is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions.