What is a custodial UTMA or UGMA account and should I open one for my child?

A UTMA/UGMA is a custodial brokerage account you open and manage on behalf of a minor; the money legally belongs to the child and transfers to their full control at the age of majority (18–25 depending on your state). It's flexible — funds can be used for anything benefiting the child, not just college — but that flexibility is also the catch: at the transfer age, your child can spend it however they wish. Custodial accounts also count heavily against financial aid and can trigger the "kiddie tax" on investment income above roughly $2,700 (2025). If the goal is specifically education, a 529 plan usually offers better tax treatment and aid impact. Use a UTMA when you want broad flexibility and are comfortable handing over control later. Compare education strategies with our college planner at wealthserene.com/tools/college-planner.