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Uniform Transfers to Minors Act


The Uniform Transfers to Minor’s Act (UTMA) provides a simple and inexpensive method of making a gift or bequest to a minor without the expense of a trust.

What is an UTMA Account dragged

Duties of the Custodian 

  • Collect, hold, manage, invest and reinvest the assets.
  • Deal with assets as a prudent person would.

Payments by Custodian

  • Make payments to the minor (or for his or her benefit) in whatever amounts the custodian considers advisable.
  • Consideration need not be made as to:
    • Another’s duty or ability to support the minor, or
    • Any other income available to the minor.

Life Insurance Rules for Policies Held in Custodianship

  • Life or endowment policies on the minor’s life must name his or her estate as the sole beneficiary.
  • The minor, his or her estate, or the custodian (as custodian for the minor) must be the irrevocable beneficiary of policies on the life of someone other than the minor.

Termination of a Custodianship

The custodianship is generally ended when the minor becomes of age (18 or 21). A few states have provisions allowing the custodianship to be extended to age 25.1 Some states permit the donor to select any age between 18 and 21 to distribute the assets.

Further Considerations

  • Both real and personal property can be transferred.
  • The donor may be the custodian. Sometimes a transfer of possession and control to a third party is necessary to establish one’s intent to complete the transfer. If notice is given to the appropriate third person (e.g., bank, insurance company, etc.) or is made a public record, as with the recording of a deed, the donor can be the custodian. However, if the donor dies prior to distributing the assets to the minor, the value of the assets will be included in his or her gross estate.
  • A transfer may be for only one minor and only one person may act as custodian at a time. Successor custodians may be appointed. Title to the property vests in the minor and he or she is subject to income tax on the earnings or gain. For certain children, unearned income in 2021 in excess of $2,200 is subject to taxation (the “kiddie” tax) at the higher of the child’s marginal income tax rate, or the marginal income tax rate of the parent(s).
  • These rules may vary slightly from state to state.


1 If the donor specifies that the custodianship will extend past the child’s reaching age 21, the transfer will not qualify as a gift1 If the donor specifies that the custodianship will extend past the child’s reaching age 21, the transfer will not qualify as a gift of a present interest.

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