What Can a UTMA Actually Pay For?
If you’re a Millennial or Gen Z parent, you’ve probably seen how fast costs pile up for kids—school, activities, tech, even therapy. A UTMA account (Uniform Transfers to Minors Act) lets you save and invest for your child’s future, but it also gives flexibility beyond a 529 plan. The rule: funds must benefit the child, not cover your everyday household bills.
What It Can Cover
- Education: Tuition, books, laptops, tutoring, study abroad.
- Enrichment: Camps, sports, music lessons, robotics club.
- Health: Uncovered medical or therapy costs that support your child’s needs.
- Big milestones: Once of age, your child can use funds for housing, a car, or other adult expenses.
What It Can’t Cover
- Basic needs you’re legally responsible for (food, housing, clothing).
- Family vacations or your own debts.
- Expenses for siblings or non-beneficiaries.
Why It Matters
UTMA accounts are flexible but come with trade-offs: they count as your child’s asset for college aid formulas and the funds legally transfer to them at adulthood. That’s why consistency matters more than perfection. Small steps—like automating $25–$50 a month—add up over time.
Start today: open a UNest UTMA and put your child’s future on autopilot. What feels small now could unlock big opportunities later.
Don't just take our word for it
Hear what trusted money experts say about why UTMA and UGMA accounts can be a smart way to invest for a child’s future.
There are some tax advantages to using UGMA and UTMA accounts… Since they’re in your child’s name, the accounts will be taxed according to their tax bracket… There are no contribution limits on UGMA and UTMA accounts.
Dave Ramsey
Personal Finance Expert
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Investing for your kid’s future
Dave Ramsey
Personal Finance Expert
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...you could consider opening an account where you can dive deeper with the kids by your side. The easiest way to do so is to open a custodial account, known as an UGMA ... or UTMA ... account.
Jill Schlesinger
Emmy winning Business Analyst
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Straightforward “starter” investing account for kids
JILL SCHLESINGER
Emmy winning Business Analyst
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You can give children money that can accumulate somewhat tax-free over time... I love them (UTMAs) because they were like, trusts that you didn't need lawyers to create.... I think it's one of the better tax breaks around though. I know hunting for tax breaks may not sound very exciting, but that's how you take care of your family.
Jim Cramer
CNBC Host
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Give children money that can accumulate over time
Jim Cramer
CNBC Host
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