UTMA
Hi Terry.
Please explain the benefits or cons of a UTMA account.
I would like to set something aside for our grandchildren and would like to be knowledgeable prior to investing our money.
We are well set for retirement and can afford to put some money away for the grandkids.
Terry Says
You should use a 529 college savings account. Read this article.
The drawbacks of an UTMA (custodial) account are two big ones!
1. At age of majority (18 in most states) the money becomes theirs to spend as they please!
2. If the family applies for financial aid for college (FAFSA form) the money in a custodial account weighs 7X more heavily against the family in the aid formula than money in a 529 college savings account.
