How To Transfer a UTMA Account to a Child

An UTMA or United Transfers to Minors Act allows you to transfer assets such as artwork, real estate, stocks and more into that child's account. Until the child reaches the age of majority, the account is managed by the appointed custodian. 

Should you create a UTMA account? Find out what is UTMA, the pros and cons, contribution limits, withdrawal limits and more below.

Key Takeaways

• A UTMA account lets you transfer assets like cash, stocks, real estate and art to a minor without setting up a trust. A custodian manages the account until the child reaches the age of majority, which is 18, 21 or up to 25 depending on your state.

• Contributions are irrevocable and capped at $19,000 per child per year before gift tax kicks in, or $38,000 for married couples. Earnings above $2,700 in 2025 trigger the kiddie tax, and UTMA assets can reduce your child's college financial aid eligibility.

• Open a UTMA if you want flexible, tax-advantaged gifting for a child's broad needs — but skip it if you need to keep control of the funds or worry your child won't manage a lump sum responsibly at 18 or 21.

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How Do I Transfer a UTMA Account to the Adult Beneficiary?

Here's how the transfer works once the beneficiary reaches the age of majority.

1. Confirm the age of majority. Check your state's UTMA rules to confirm the exact age the account must transfer. The custodian's authority ends on that date.

2. Open an individual brokerage account. The beneficiary opens a standard taxable brokerage account in their own name at the same firm or a new one. This is the receiving account.

3. Request a change of registration. The custodian or beneficiary contacts the brokerage and asks for a UTMA change of registration form or a beneficiary distribution form. Each firm uses slightly different names for the same paperwork.

4. Submit ID and signed forms. The beneficiary returns the form with a government ID, Social Security number and proof of date of birth. Some firms require a Medallion Signature Guarantee.

5. Move the assets in-kind. The brokerage re-titles the account or transfers the holdings in-kind to the new individual account. Stocks, exchange-traded funds (ETFs) and mutual funds usually move without being sold, so no taxable event is triggered by the transfer itself.

6. Confirm the old UTMA is closed. Once assets settle, ask the brokerage to confirm the UTMA is closed and request written confirmation for your records.

What Documents Do You Need to Transfer a UTMA Account?

You'll need a short stack of paperwork before the brokerage releases the account.

• Government-issued photo ID: A driver's license, state ID or U.S. passport for the beneficiary.

• Social Security number: Required to open the receiving individual brokerage account.

• Proof of age of majority: A birth certificate or state ID showing the beneficiary has reached the required age.

• Change of registration form: Provided by the brokerage holding the UTMA — sometimes called a UTMA termination or beneficiary distribution form.

• Medallion Signature Guarantee: Required by some brokerages to verify signatures on transfers above a set dollar amount. Banks and brokerages issue these in person.

• Account statement: A recent statement from the UTMA helps the receiving firm match account numbers and holdings.

What Is the UTMA Age of Majority in Each State?

UTMA transfers depend on the state where you live, and sometimes even the elections made when the account was opened. Most of the time, the age to transfer is 18 or 21, though some states allow transfers up to age 25 if that election was made.

The age of majority depends on the state where the account was opened. California sets the standard transfer age at 18. New York, Texas and Florida set it at 21. States like Wyoming and Tennessee let the account creator extend the transfer age up to 25 if that age is written into the account at the time it was opened.

What Is a UTMA Account and How Does It Work?

UTMA accounts are similar to UGMA accounts, which are created under the Uniform Gifts to Minors Act, but UTMA accounts allow a broader range of assets, including real estate, securities, bank deposits,and insurance policies. 

Can you convert a UTMA individual account? Not until the child reaches the age of majority, and then they have the option to do so. 

1. When you set up a UTMA account, you can either act as the custodian or appoint another custodian for the account until the child reaches the age of majority.

2. The assets in the UTMA account then belong to the minor, even though they cannot access the assets until the age of majority. 

3. Once the minor reaches the age of majority, they can convert a UTMA to an individual account.

4. In the meantime, the custodian is responsible for investing or managing the assets on the minor's behalf. 

Keep in mind that there are some less-than-obvious disadvantages to a UTMA related to the relatively young age in which the minor gets access to the funds. Many 18 or 21-year-olds may not responsibly manage access to a large lump sum.

An Example

Suppose there is $100,000 in the UTMA, and your child, grandchild, niece or nephew reaches the age of majority for your state. There is nothing you can do to stop them from gaining access to those funds. And the young adults are at an age when they are not making the best financial choices. While you may have envisioned the UTMA as the down payment to their first home or the seed to their retirement fund, they could burn through those funds before their 22nd birthday. 

In addition, some states allow minors to petition for partial access earlier. For that, you need to understand your individual state’s UTMA rules. 

What Can UTMA Funds Be Used For?

The funds in the UTMA account are a gift to the minor, so before they can manage the account themselves, they can be used for any expenses related to the minor, including education, sports, or living expenses. 

Unlike a 529 plan, the funds in a UTMA account can also be used toward any type of expense, not just educational ones. For example, if your child wants to get additional coaching for their favorite sport, those expenses could come from UTMA funds.

There are no penalties for withdrawing funds from a UTMA account as long as the expenses are directly related to the minor. However, you’ll need to keep close records of the expenses from UTMA and document their direct benefit to the child. 

Profits on interest-bearing UTMA accounts are usually reported on the child's tax return. However, some families report these profits on the parents' tax return at their parental tax rate.

UTMA Transfer Rules

UTMA transfers enable minors to receive gifts and assets directly in their name instead of through a trust. This simplifies the transfer process, avoids the costs and complexities associated with setting up a trust, and provides a straightforward way for minors to manage and have control over the assets once they reach the age of majority.

Here's what you need to know if you are considering setting up a UTMA account. 

UTMA Contribution Limits

Any single individual can contribute up to $19,000 per child per UTMA account without paying gift tax. The limit is $38,000 for married couples. Gifts above $19,000 per adult per year usually require you to fill out a gift tax form and submit it to the IRS, although it is unlikely you would owe tax on that money unless you've given more than $13.61 million in your lifetime. 

How Are UTMA Accounts Taxed?

UTMA accounts have no withdrawal limits. However, UTMA withdrawal rules set out that the funds belong to the minor from the moment of transfer, so the funds can only be used for the direct benefit of the minor. Can parents take money out of UTMA accounts? Yes, but only for purposes related to the minor. 

UTMA accounts aren't tax-exempt, so you'll need to file taxes each year on income over $2,700 on the UTMA. Earnings must be reported either on the child’s tax return at a lower tax rate or on the parents’ tax return at their rate. Consult your accountant about your situation. 

Types of Assets

You can transfer nearly any type of asset to a UTMA account for a child.

Assets include:

• Real estate

• Intellectual property

• Works of art

• Stocks

• Bonds

• Mutual funds

• Annuities

• Insurance policies

• Cash and other assets

One of the main advantages of a UTMA account is that family heirlooms, property, stocks, fine art, valuable jewelry and other assets can be easily transferred to a UTMA account.

Closing a UTMA Account 

How do you close out a UTMA account? You can't until the child reaches the age of majority when they can do whatever they want with the funds. 

Once the child reaches the age of majority, they can transfer or use the funds and close the UTMA account. However, after setting up the UTMA account, parents don’t have the option of closing it.

Irrevocability

Transfers to a UTMA account are irrevocable. From the moment the transfer is finalized, the assets held in a UTMA account belong to the minor whose name is on the account. 

If the parents need to use those funds at any point, they will not be available to them, unless it is for the direct benefit of the child. When the minor reaches the age of majority, they can legally do whatever they want with those funds. 

Financial Aid

A UTMA account may affect a minor's need-based college financial aid eligibility. While this may not be a deciding factor in whether or not you start a UTMA account for your child, it can affect your child's financial assistance prospects. 

What Are the Pros and Cons of a UTMA Account?

There are pros and cons to UTMA accounts.

The pros include:

• Tax benefits: Income generated by assets in UTMA accounts may be taxed at the minor’s lower tax rate, potentially resulting in tax savings.

• Asset control: The custodian controls how the assets in the UTMA account are managed and invested until the minor reaches the age of majority.

• Estate planning: UTMA accounts can be used in estate planning, allowing adults to transfer assets to minors without the need for a trust or formal estate planning documents.

• Financial education: UTMA accounts can teach minors about financial responsibility and investment management, as they may become involved in decisions regarding the assets in the account.

• Flexible use: The assets in UTMA accounts can be used for any purpose that benefits the minor, including education expenses, medical expenses, and other needs.

UTMA Account Cons

While UTMA accounts are a convenient way to transfer assets to a minor, they have a few potential downsides.

Before setting up a UTMA, consider these cons:

• Loss of control: Once the minor reaches the age of majority, they gain access to the assets. The UTAM is irrevocable, so once assets are transferred there, the minor will receive the assets and may do what they choose with them. 

• Tax considerations: Income generated by the assets is subject to the "kiddie tax" if it exceeds certain thresholds, potentially resulting in higher taxes for the minor. While this isn’t necessarily a major downside, it’s worth considering and ensuring the proper tax filings are done on the minor’s behalf. 

• Use of funds: The assets in UTMA accounts must be used for the benefit of the minor. Once the minor reaches the age of majority, they can use the funds for any purpose that may not align with the custodian’s intentions.

• No legal protection: UTMA accounts do not offer the same level of legal protection as trusts. Once the minor reaches the age of majority, they have full control over the assets, and the custodian cannot impose any restrictions.

• Impact on financial aid: Assets held in UTMA accounts may impact the minor’s eligibility for financial aid when applying for college, as they are considered the student’s assets and may reduce or eliminate the student's ability to qualify for financial aid.

UTMA Transfer vs. UGMA Transfer vs. Trust Transfer

If you're weighing other ways to pass assets to a young adult, here is how the three most common options compare.

Should You Open a UTMA Account?

Opening a UTMA account can be a way to help set your child up for financial security. Because of the possible tax advantages, it can also be a way to save some money on the funds you’d spend anyway on your child’s education, sports, or other activities. 

However, because a UTMA has limitations and is irrevocable, you should carefully consider whether it's the best way to transfer assets to your child. If you're not sure whether it's the best option, you can also find reliable free financial advice to discuss your situation, consider managed investment accounts, or set up auto savings to build your nest egg. 

FAQs

Can I close a UTMA account?

Closing UTMA accounts can only happen after the child reaches the age of majority for your state. You, as the parent or custodian, cannot close a UTMA account, as it is not your own account. When the child reaches the age of majority, they may do whatever they want with the funds, including transferring the funds to another account and closing the UTMA account. 

What happens to the UTMA account when the minor turns 21?

When a minor turns 21, in some states a UTMA account is transferred to the minor and they may choose to convert it to a standard bank account. In some states, the age of majority is 18, so the minor will have access to the UTMA account from 18. In a few other states, the custodian may choose to delay access to the UTMA until the minor reaches age 25. 

Do I have to pay taxes on UTMA accounts?

Yes, you have to pay taxes on a UTMA account. Usually, the taxes are reported on the child’s taxes, but in some cases, the parent will report the income on their taxes. As of 2025, if the child receives less than $2,700 in capital gains or investment income, they don’t have to report anything. If they earn more than $2,700, a separate tax return must be filed on their behalf.

Can you change the custodian on a UTMA account?

Yes, you can change the custodian of a UTMA. To do so, you generally must provide the signature of the previous custodian, a death certificate, or an official court document. If the child’s legal name changes, you can also update their name on the same form. 

Can you transfer a UTMA before the age of majority?

No, you generally can't transfer a UTMA before the age of majority, although the precise rules or limitations can vary from state to state. The age of majority also varies from state to state. In states, a UTMA account can only be handed over with the custodian’s permission at age 18, and at age 21 it's transferred automatically. In other states, it's automatically transferred at either age 18 or 21. In a few states, the custodian may delay the age of transfer up to age 25.

Key Terms

• UTMA account: A Uniform Transfers to Minors Act account lets you give assets to a child without creating a trust. A custodian manages the account until the child reaches the age of majority.

• Custodian: A custodian is the adult who manages a UTMA account for the child. The custodian can invest or use funds only for the child’s benefit.

• Age of majority: The age of majority is when a child legally becomes an adult and takes control of a UTMA account. Depending on state law, that is usually 18, 21 or up to 25.

• In-kind transfer: An in-kind transfer moves investments from one account to another without selling them first. That usually avoids triggering taxes from a sale during the transfer.

• Kiddie tax: The kiddie tax applies part of a child’s unearned income above certain limits to the parent’s tax rate. For 2025, that threshold is $2,700.

Sources:

• Cornell Law School Legal Information Institute: UTMA | Wex | US Law

• Vanguard: Investment Accounts: Types, Uses & How to Choose

• Cornell Law School Legal Information Institute: minor | Wex | US Law

• Morgan Stanley: In-Kind Transitions: A Primer

• Internal Revenue Service: 2025 Instructions for Form 8615

• Finaid: Age of Majority and Trust Termination

• Western & Southern: UTMA vs UGMA Accounts: What's the Difference?

• Capital Group: Transferring UGMA and UTMA assets

• Vanguard: UGMA/UTMA accounts

• Finaid: UGMA & UTMA Custodial Accounts

• IRS: Instructions for Form 709 (2025)

• Fidelity: Custodial account

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