UGMA vs UTMA: what each can hold, and the age that decides the payout

Search UGMA vs UTMA and most results run the same table: asset types, age of majority, tax, financial aid, and no numbers.

Then most of them skip the part that matters to a dad filling out the form this week. Which law is he even signing up under, and what changes in dollars because of it?

So we went to the source. The model acts, the federal guidance and 5 state statutes. Then we ran the 1 difference that turned out to have a price tag.

What is the difference between UGMA and UTMA?

The UGMA is the Uniform Gifts to Minors Act. The UTMA is the Uniform Transfers to Minors Act. Both are model laws written by the Uniform Law Commission and then adopted state by state.

Both create the same thing: a custodial account. An adult runs the money, the kid owns it, and the custodian hands it over at an age the state picks.

The difference is what the law lets into the account and where it can come from.

The UGMA was adopted in 1956. It was modeled on an "Act concerning Gifts of Securities to Minors" sponsored by the New York Stock Exchange and the Association of Stock Exchange Firms, which had already passed in 14 states.

So the original kid's account law was written with help from the stock exchange, and the first version let you gift stocks. We are as shocked as you are.

The 1956 act added money. The 1965 and 1966 revisions added life insurance policies and annuity contracts. That was the full list. By 1983, some 11 jurisdictions were still running the 1956 version.

The UTMA arrived in 1983 (last amended 1986) and threw the list out. Its prefatory note says it "allows any kind of property, real or personal, tangible or intangible, to be made the subject of a transfer to a custodian."

It also widened the door. A UGMA took lifetime gifts. A UTMA can take money from a trust, an estate or a guardianship, and from a third party who owes the kid money, like a tort settlement or a bank account payable on death to a minor. That is why the name changed from "Gifts" to "Transfers."

Look at the bottom 4 rows. Ownership, tax and financial aid are identical. The column headers are the only thing that changes.

What can a UTMA hold that a UGMA cannot?

Everything the UGMA list left out. Real estate, a car with a title, a royalty stream, an interest in a family business, art.

South Carolina's version, the newest one on the books, spells out how each kind gets titled. Securities get registered "as custodian for" the kid. Real estate gets recorded that way. A car title gets issued or endorsed that way. Then there is a catch-all for "an interest in any property not described" above.

Here is the part the comparison tables skip. A house and a car come with liabilities as well as value, and a brokerage account full of index funds does not.

The UTMA drafters saw it. Their prefatory note says the expansion "creates a significant problem of potential personal liability for the minor or the custodian arising from the ownership of property such as real estate, automobiles, general partnership interests, and business proprietorships."

Their fix was section 17, which generally limits a third party's claims to the custodial property itself. They still wrote that the act "should be used with caution" for real estate and general partnership interests, and that a trust may be the better tool for that kind of gift.

So a UTMA can hold a rental house for a 4-year-old. The 4-year-old now also owns a rental house, with everything a rental house brings. The statute gives the custodian the power to insure against that, and it does not make the risk go away.

The financial aid form does not care what the asset is. The 2027-28 Student Aid Index guide counts real estate other than the family home in the student's net worth, and student assets convert at 20%. A rental house in a UTMA lands on the FAFSA exactly like a brokerage account does.

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Is UGMA still a thing, or is every account a UTMA now?

For anything opened today, it is a UTMA. Old UGMA accounts are still out there, which is why the acronym never left.

The Social Security Administration's own manual, POMS SI 01120.205, said that "only South Carolina and Vermont have not adopted the UTMA." Both have since switched.

Vermont's Act 7 replaced its Uniform Gifts to Minors Act with a Uniform Transfers to Minors Act, effective Jul 1, 2015. South Carolina's Act 128 did the same, effective Apr 4, 2022, and repealed the South Carolina Uniform Gifts to Minors Act in section 7.

Take the 2 holdouts off the SSA list and no state is left running a UGMA for new money.

There is even a rule for the old name written in by habit. South Carolina Code 63-5-705 says the new act applies to a transfer that "purports to have been made under the South Carolina Uniform Gifts to Minors Act." A gift labeled UGMA today gets read as a UTMA gift.

What is the UTMA age of majority by state?

It is in the statute, not in the brokerage's fine print. 5 states are shown below, read straight from the code. Each state's statute sets its own age, and this is the row that moves real money.

Same act, same name on every statement, and a 7 year spread between the earliest and latest handover. That spread is where the dollars are.

We ran it on the baseline every projection on this site uses. $150 a month, deposited at the end of each month from birth to 18, at 7% a year compounded monthly. Then the deposits stop and the money keeps growing until the custodian has to hand it over.

The return moves the size of the gap. At 5% the 3 extra years between 18 and 21 add $8,458. At 9% they add $24,831.

The direction never moves. Every year the custodianship runs past 18 is a year the custodian, not an 18-year-old, decides what the money is for.

Now put a kid in the picture. California's default hands $64,608 to an 18-year-old. Florida's default hands $79,657 to a 21-year-old. Same deposits, same fund, same kid. The only thing separating the 2 numbers is the state the account was opened under.

Nobody on the internet is going to tell you what an 18-year-old does with $64,608. We were 18 once. We have a rough idea, and it involves a truck.

What happens to an old UGMA account when the state switches?

It becomes a UTMA for almost every purpose, with 1 exception that matters: its end date does not move.

Section 22 of the 1986 model UTMA applies the new act to custodianships made under the old UGMA, "except insofar as the application impairs constitutionally vested rights or extends the duration of custodianships in existence." The drafters' comment says it plainly. "Prior custodianships will continue to terminate at the age prescribed under the prior Act."

South Carolina's 2022 statute copies that language into Code 63-5-710(b). So does Vermont's 2015 act, in 14 V.S.A. 3232(b).

Here is why that matters. Some states lowered their UGMA handover age to 18. The UTMA drafters wrote an optional subsection 22(c) for exactly "those states that amended their Acts to reduce the age of majority to 18" and then went back to 21.

And under 22(b), a grandparent who opened a UGMA for a kid under an 18 rule cannot turn it into a 21 account by switching the label, because the new act cannot extend an existing custodianship. On our baseline, the kid takes control of the full $64,608 at 18, 3 years and $15,049 of projected growth before a gift under a 21 rule would have been handed over.

New money is a different story. A gift made today is a UTMA gift and follows today's UTMA age, even if it lands in an account a broker still calls UGMA. The 2 pots can end on different birthdays, which is 1 more reason the statement title is the least useful line on it.

Who pays taxes on a UGMA or UTMA account?

The kid, on both. The act makes no difference here at all.

The UTMA prefatory note says a custodianship "is not a separate legal entity or taxpayer" and that because the property is vested in the minor, "any income received is attributable to and reportable by the minor."

The kiddie tax decides how much of that income gets taxed at whose rate. For 2026, Rev. Proc. 2025-32 sets the base amount at $1,350.

• The first $1,350 of the kid's unearned income is covered by the dependent standard deduction.
• The next $1,350 is taxed at the kid's own rate.
• Everything over $2,700 is taxed at the parent's rate, on Form 8615.

IRS Topic 553 lists who it hits. A kid under 18 at year end, a kid who is 18 without earned income over half their own support, and a full-time student from 19 to 23 under the same support test.

Notice what that does to the handover age. The kiddie tax follows the kid's age and student status, not the account. A Florida account held to 21 does not change the tax on a 20-year-old full-time student, because the IRS is not reading the custodianship papers.

There is 1 shortcut. A parent can elect to report the kid's income on the parent's own return, on Form 8814, when the kid's only income is interest and dividends (including capital gain distributions) and gross income is under 10 times the $1,350, which is $13,500 for 2026. IRS Topic 553 lists the other conditions.

We ran the kiddie tax year by year on this same $150 a month in UTMA vs 529. The same numbers apply to a UGMA, because the tax rules are the same.

What are the disadvantages of UGMA accounts?

Most of them are the disadvantages of every custodial account. 1 of them belongs to the UGMA alone, so it goes first.

The UGMA-only one: the end date is frozen. An account made under an old UGMA ends on the old act's schedule. A UTMA gift made today can use whatever later age the state now allows, up to 25 in Florida and Virginia, though in both states the kid can still claim it at 21 unless the giver, in writing at the start, makes that right expire after a notice window (Florida) or the kid lets the 21 window pass (Virginia).

That is the only line in the whole comparison where the old law costs something the new law does not.

It is not yours anymore. South Carolina Code 63-5-655(b) says a transfer "is irrevocable, and the custodial property is indefeasibly vested in the minor." That statute now governs old UGMA accounts in South Carolina too, under 63-5-710(b). There is no take-backs clause.

You can spend it, but only on the kid. A custodian can pay out "so much of the custodial property as the custodian considers advisable for the use and benefit of the minor," under Code 63-5-670. The same section says that spending does not replace "any obligation of a person to support the minor."

The FAFSA charges the kid's rate. The 2027-28 SAI guide converts student assets at 20%. On the $64,608 baseline at 18, that is $12,922 added to the Student Aid Index in a single year. We priced all 4 years against a parent 529 in our 529 and FAFSA piece.

UGMA/UTMA 529 vs individual 529: can a custodial account move into a 529?

Yes, but only as cash, and it stays the kid's money. That is the difference between a UGMA/UTMA 529 and an individual 529 a parent owns.

26 U.S.C. 529(b)(2) says a plan only qualifies if "purchases or contributions may only be made in cash." So the move is 2 steps. The custodian sells, which is a taxable sale for the kid, and puts the cash into a 529 for the same kid.

New York's 529 plan, for one, calls this a UGMA/UTMA 529. It says it does not accept "non-cash assets, such as mutual fund shares or other securities," and that the custodian acts as the account owner only until the custodianship ends.

The same plan says the custodian cannot pick a new beneficiary except as UGMA/UTMA rules allow. An individual 529 has no such limit, because the parent's money was never a gift to the kid.

The 1986 model act never mentioned 529 plans, and the Uniform Law Commission's own 2025 discussion draft called that gap one "raising questions about the ability of custodians to transfer custodial property to these accounts." In July 2026 the Uniform Law Commission gave final approval to a new UTMA that lets a custodian move custodial property into a 529 if it is in the best interests of the minor. It applies in a state only once that state's legislature adopts it.

A rental house or a car cannot make that trip at all without being sold first. The asset rule that made the UTMA wider is the same rule that makes it harder to move.

A Roth IRA takes a cash contribution, which the custodian can fund from the UTMA after selling, capped at the kid's earned income. That and the aid math are in UTMA vs 529.

UGMA vs UTMA vs 529: where does this page stop?

Right here. UGMA vs UTMA is a question about which custodial law you are under. UTMA vs 529 is a question about whether a custodial account is the right tool at all.

The second one has its own math. Same $150 a month, both accounts at $64,608, then the exit tax, the aid form and the non-college case priced one by one. That is in UTMA vs 529: which one leaves your kid more after tax and aid.

If the start date is the thing keeping you up, that math lives in start age beats amount.

Frequently asked questions

Is UGMA or UTMA better?

For a new account it is not a choice, because every state (and DC) now runs a UTMA. The UTMA can hold any kind of property, while the old UGMA was limited to cash, securities and insurance. Tax and financial aid treatment are the same on both.

At what age does a UTMA end?

The 1986 model act says 21 for gifts, and each state sets its own rule. California's default is 18 and Florida's is 21. Florida and Virginia let a giver pick 25, but the kid can still claim the money at 21 unless that right is limited. A new model act approved in July 2026 also allows 25.

Can I convert a UGMA to a UTMA?

In every state an old UGMA account now runs under the UTMA for most purposes. The 1 thing that does not change is its end date, which stays at the age the old UGMA set when the gift was made.

Who pays taxes on an UTMA account?

The kid. In 2026 the first $1,350 of the kid's unearned income is untaxed, the next $1,350 is taxed at the kid's rate, and anything over $2,700 is taxed at the parent's rate under the kiddie tax.

Does my kid need to file a tax return for a UTMA?

A dependent kid has to file once unearned income is more than the dependent standard deduction amount, which is $1,350 for 2026 under Rev. Proc. 2025-32. If the kid's only income is interest and dividends under $13,500, a parent may be able to report it on Form 8814 instead.

How much can I put in a UTMA per year?

The UTMA statutes we read set no annual cap on the account. The practical line is the gift tax annual exclusion, $19,000 per giver per kid for 2026 under Rev. Proc. 2025-32.

Is the UTMA changing in 2026?

The Uniform Law Commission gave final approval to a new UTMA on Jul 15, 2026. It allows some custodianships to run to 25 and lets a custodian move custodial property into a 529. It changes nothing in a state until that state's legislature adopts it.

Does a UGMA or UTMA count against financial aid?

Yes, as a student asset converted at 20% under the 2027-28 SAI guide. On a $64,608 balance that adds $12,922 to the Student Aid Index in 1 year.

Rules current as of Oct 2026: UTMA in all 50 states after Vermont (Jul 1, 2015) and South Carolina (Apr 4, 2022). 2026 kiddie tax base amount $1,350 and threshold $2,700, gift tax annual exclusion $19,000 per donor (Rev. Proc. 2025-32), FAFSA student asset rate 20% (2027-28). Tax amounts reset every year and the Uniform Law Commission approved a revised UTMA in July 2026 that states may adopt, so check the date on this line before leaning on it.