One account, two people: the one who owns it and the one who runs it.

Answer:

Yes, but an adult controls it. In a UTMA or UGMA custodial account the minor owns the property, while a custodian manages and invests it on the minor’s behalf until the minor reaches the age of majority.

Questions:

• Would you rather start investing now with an adult’s help, or wait until you turn 18 and do it entirely yourself? Why?
• Does starting to invest before you turn 18 really matter, or could you catch up by saving more later?
• When the account becomes yours at the age of majority, would you keep it invested or spend some of it? Why?

Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the Numbers: (FINRA)

FINRA lays out the split this way: “Generally, when UTMA or UGMA accounts (UTMA/UGMA Accounts) are established, the beneficiary (a minor) becomes the owner of the property at the time of the gift; however, the custodian manages and invests the property on the beneficiary’s behalf until the beneficiary reaches the age of majority, at which point the custodian is required to transfer the custodial property to the beneficiary.” That handover does not always happen on schedule. In a review of brokerage firms, FINRA found that “some firms did not take any steps to track or monitor when beneficiaries would reach the age of majority,” and that in some instances firms “permitted custodians to effect transactions in, and withdraw, journal and transfer money from UTMA/UGMA Accounts months, or even years, after the beneficiaries reached the age of majority.”

Want students making investing decisions of their own? Play STAX in the NGPF Arcade and see how their portfolio holds up over time.

About the Author

Dave Martin

Dave joins NGPF with 15 years of teaching experience in math and computer science. After joining the New York City Teaching Fellows program and earning a Master's degree in Education from Pace University, his teaching career has taken him to New York, New Jersey and a summer in the north of Ghana. Dave firmly believes that financial literacy is vital to creating well-rounded students that are prepared for a complex and highly competitive world. During what free time two young daughters will allow, Dave enjoys video games, Dungeons & Dragons, cooking, gardening, and taking naps.