What You Need to Know About UTMA Regret

When you set up a custodial account for your child under the Uniform Transfers to Minors Act, you may have the best of intentions that this will ultimately benefit your loved one well into the future. Unfortunately, however, some people are realizing that this was a mistake later on. This is why some estate planning professionals refer to this as UTMA regret. This can be extremely challenging when you want to make changes to the account. 

Most people who want to transfer assets to a child will use the UTMA type of account in order to name the child as the owner. This means that the child is not able to access the assets until they have reached an age specified in the law. This is typically 18 or 21. While most of these accounts are set up by parents of that child, other relatives can do so as well. However, people have various reasons for wishing they could cancel a UTMA account, including:

It is important to carefully consider all aspects before moving forward with a UTMA account. Typically, a UTMA account is the first savings fund that grandparents and parents will set up for young children at a mutual fund company, bank or brokerage house. This is a low-cost route that allows an adult to be responsible for managing the money for a minor.