Custodial/PAUTMA Accounts

Set aside money today to give your child a bright tomorrow.

Adults keep control of financial "gift" until young person turns 21.

As a grown-up, you know how expensive things are right now. Just imagine the cost of living when your child or grandchild becomes an adult. To help them get a head start on paying for college or some other goal, you can set up a custodial account. In Pennsylvania, these accounts are governed by the Pennsylvania Uniform Transfer to Minor Act - often, they're referred to as UTMAs. Here's how they work:

• Parents or other interested persons (often grandparents) make an "irrevocable gift" to a minor without needing a court-appointed guardian.
• When the gift is given, which means an UTMA account was opened, the money becomes property of the minor.
• However, only the adult setting up the account - its custodian - can access the account and the funds in it until the child turns 21. 
• At any time, a successor custodian can be named by the original custodian.
• Minimum opening balance of $5.
• UTMA accounts earn dividends, which are considered income to the minor for federal income tax purposes.