A Massachusetts UTMA account is a custodial account under the Massachusetts Uniform Transfers to Minors Act (M.G.L. c. 201A) that lets an adult move cash, securities, real estate, or other property to a minor while an adult custodian manages it. The transfer is irrevocable. The custodian controls the assets as a fiduciary until the minor reaches 18 or 21, depending on how the property was transferred, and then must hand everything over.
How to Open a Massachusetts UTMA Account
You open the account at a bank, brokerage, or trust company that offers custodial accounts under c. 201A. The custodian provides their own information along with the minor’s details, including a Social Security number. No trust document, attorney, or court approval is required.
The registration has to follow a specific format. Massachusetts law requires the title to read: “[Name of Custodian], as custodian for [Name of Minor] under the Massachusetts Uniform Transfers to Minors Act.”1General Court of Massachusetts. Massachusetts General Laws Chapter 201A Section 9 The same wording applies whether you are opening a bank account, a brokerage account, transferring an insurance policy, or recording real estate. Confirm the exact language with the institution before signing anything; a botched title creates problems later.
Once assets go in, they are gone from the donor’s hands for good. Neither the donor nor the custodian can pull them back. That is the fundamental difference between a UTMA account and money simply held in a savings account “for” a child.
Who Can Serve as Custodian
Any adult, or a trust company, can act as custodian. The custodian does not have to be the donor. A grandparent could transfer stock and name the child’s parent as custodian, for example. A donor can also name themselves, but doing so has an estate-tax cost: if the donor dies while still serving as custodian, the IRS may pull the account back into the donor’s taxable estate.
Name a successor at the outset. If a custodian dies, resigns, or is removed and no successor was designated, someone has to petition the court to appoint one. That is avoidable delay and expense.
What the Custodian Must Do
The custodian is a fiduciary. Every decision has to be made for the minor’s benefit, not the custodian’s. Under c. 201A, the custodian may spend custodial property on the minor whenever the custodian considers it advisable, regardless of whether the minor has other sources of support.2General Court of Massachusetts. Massachusetts General Laws Chapter 201A Section 14 Education, medical care, and activities are common uses, but the statute does not restrict spending to a fixed list.
Investments have to meet a prudent-person standard. Diversify. Consider the minor’s time horizon. Avoid speculation. A custodian who piles the balance into a single volatile stock is exposed to a claim for restitution, and Massachusetts courts have removed custodians for reckless or self-dealing behavior.
Keep clean records. The statute does not require annual reports, but the custodian has to be able to produce a full accounting on request from a parent, guardian, or the minor. Keep custodial money in its own account, never mixed with your personal funds.
What Property You Can Transfer In
Section 9 of the statute covers the mechanics for each property type:1General Court of Massachusetts. Massachusetts General Laws Chapter 201A Section 9
- Cash, paid to a broker or financial institution and credited to a properly titled custodial account.
- Securities, registered in the custodian’s name using the UTMA title, or delivered with the proper endorsement.
- Real estate, recorded or registered in the custodian’s name with the UTMA designation. Property taxes and carrying costs come from the custodial property.
- Life insurance and annuities, registered with the issuer or assigned in writing under the UTMA naming convention.
- Tangible personal property, transferred by re-titling if it has a certificate of title, or by physical delivery with a signed instrument identifying custodian and minor.
A will can also fund a UTMA account if it names a custodian and references the Massachusetts Uniform Transfers to Minors Act, and a personal representative or trustee can transfer property into a custodial account for the minor. Every completed transfer, whatever the source, is irrevocable.
How the Account Is Taxed
The account belongs to the minor for tax purposes. Its income goes on the child’s return, not the custodian’s.
Federal Kiddie Tax
The federal kiddie tax applies to most children under 18 and to some older dependents who are full-time students. For 2026:
- The first $1,350 of unearned income is covered by the child’s standard deduction and not taxed.
- The next $1,350 is taxed at the child’s own rate.
- Anything above $2,700 is taxed at the parent’s marginal rate.3Internal Revenue Service. Instructions for Form 8615
If unearned income exceeds $2,700, Form 8615 gets filed with the child’s return.4Internal Revenue Service. Topic no. 553, Tax on a Child’s Investment and Other Unearned Income (Kiddie Tax) For larger UTMA accounts throwing off meaningful dividends or capital gains, most of the tax advantage you might expect from putting assets in a child’s name disappears.
Massachusetts State Taxes
Massachusetts taxes most investment income at a flat 5%, including dividends, interest, and long-term capital gains. Short-term capital gains are taxed at 8.5%.5Mass.gov. Massachusetts Tax Rates A 4% surtax also applies to the portion of any individual’s taxable income above an annually adjusted threshold (originally $1,000,000).6Mass.gov. Massachusetts 4% Surtax on Taxable Income It is unlikely to touch a typical UTMA balance, but it can matter for very large accounts.
Gift Tax
Contributions count as completed gifts for federal gift-tax purposes. For 2026, a donor can give up to $19,000 per recipient without filing a gift-tax return; married couples electing gift-splitting can contribute up to $38,000 per child per year.7Internal Revenue Service. Frequently Asked Questions on Gift Taxes Larger transfers eat into the donor’s lifetime gift and estate tax exemption. Because the gift is irrevocable, size your contributions with care.
Effect on College Financial Aid
UTMA accounts are reported on the FAFSA as the student’s asset, not the parent’s, and student assets are assessed at 20% compared with roughly 5.6% for parent assets. A $50,000 UTMA balance can reduce need-based aid eligibility by about $10,000, whereas the same money in a parent-owned 529 plan would reduce it by roughly $2,800. If the child is likely to apply for need-based grants, weigh a UTMA against a 529 before contributing.
When the Minor Takes Over
Under M.G.L. c. 201A, Section 20, the custodian must transfer everything remaining at the earliest of these events:8General Court of Massachusetts. Massachusetts General Laws Chapter 201A Section 20
- Age 21, for property transferred through a custodian nominated in a will (Section 3) or by a personal representative, trustee, or other fiduciary (Sections 4 and 5).
- Age 18, for property transferred by an adult or minor directly to a custodian (Sections 6 and 7), unless the custodian was nominated under Section 3.
- The minor’s death, in which case the custodial property passes to the minor’s estate.
The 18-versus-21 line matters. A grandparent’s will that nominates a custodian keeps assets locked until 21. A lifetime gift the same grandparent makes straight into a UTMA account, with no will nomination, releases at 18. When both kinds of transfers land in one account, different termination ages can apply to different portions of the balance.
Once the beneficiary reaches the applicable age, the transfer has to happen promptly. There is no grace period, and the custodian has no authority to hold funds back because the young adult might spend unwisely. If the custodian delays, the beneficiary can petition Probate and Family Court to compel the transfer. Any outstanding tax liabilities become the beneficiary’s, and selling investments to complete the transfer can itself generate taxable gains.
If you want conditions on distributions past 18 or 21, a UTMA account cannot deliver them. A formal trust can. Once the termination age arrives, the money belongs entirely to the former minor.
If Something Goes Wrong
UTMA accounts run without court involvement almost always. When they do not, a parent, guardian, the minor, or any interested party can petition Probate and Family Court to review the custodian’s management.
Common grounds include spending custodial funds on personal expenses, failing to keep records, making reckless investments, or refusing to transfer assets at the termination age. If the court finds mismanagement, it can order repayment, remove the custodian and appoint a successor, or impose other civil remedies. Courts also resolve disputes over the validity of transfers and can appoint a guardian or conservator if the minor becomes incapacitated before the termination age.