You want to give your grandchildren the world. We’ll help you do it wisely.  From college tuition to first homes, from Roth IRAs to rainy day funds—grandparents in Florida are stepping up to support the next generation. And with the right tools, your financial gifts can do more than cover a semester or two. They can build a foundation for lifelong success, while avoiding legal and tax headaches down the road.

At Welch Law, PLLC in Jupiter, we guide Florida families through the nuances of smart, tax-savvy giving. One often misunderstood yet powerful tool? Custodial accounts under the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA).

If you’re thinking about gifting to your grandchildren, read this first.

What Are UGMA and UTMA Accounts?

Think of UGMA and UTMA accounts as training wheels for financial independence. These custodial accounts allow adults—usually grandparents or parents—to gift assets to minors while maintaining oversight until the child reaches adulthood.

• UGMA accounts: Limit investments to financial assets like stocks, mutual funds, and bonds.

• UTMA accounts: Go a step further. In Florida, you can also gift real estate, artwork, patents, cryptocurrency, or other tangible and intangible property.

In both cases, an adult custodian manages the account until the child hits the age of majority—18 in Florida under UGMA, and up to 25 under Florida’s UTMA law (a detail that makes the Florida version unique and strategic). Once that threshold is crossed, the assets legally belong to the child. No strings. No veto power. Total control.

Why Florida Grandparents Love (and Fear) These Accounts

The appeal is obvious: UGMA and UTMA accounts are simple, flexible, and avoid the complexity and cost of creating a trust. But like many things in estate planning, simplicity can hide landmines.

Let’s break it down.

🎓 Education Goals? Great. But Beware of FAFSA Trouble.

Custodial accounts count as the student’s asset on the Free Application for Federal Student Aid (FAFSA)—which means they can seriously reduce eligibility for financial aid. A $50,000 UTMA account may sound like a generous head start, but come college application season, it could cost your grandchild thousands in grants or subsidized loans.

Want to fund education without sabotaging aid? A 529 Plan might be better. Want even more control? A standalone education trust can provide custom-tailored rules.

💰 The “Kiddie Tax” Bites Harder Than You Think

The IRS loves children… until they start earning investment income.

Under the kiddie tax rules, a portion of a child’s unearned income is taxed at the parents’ marginal rate, not the child’s lower rate. For 2025, the first $1,300 in investment income is tax-free. The next $1,300 is taxed at the child’s rate. Anything beyond that? Welcome to your adult tax bracket, kid.

Bottom line: UGMA/UTMA accounts can be tax-efficient for modest investments. For portfolios expected to generate substantial income, it’s wise to explore trusts or other vehicles that offer tax deferral or distribution planning.

🔐 No Control After Age 21 (or 25 in Florida UTMA)

Here’s the scariest part for most clients: once your grandchild hits the designated age (again, up to 25 under Florida UTMA if drafted properly), they can legally use the funds however they choose.

Best-case scenario? They buy a home, invest wisely, or start a business. Worst case? You just funded their spring break in Ibiza and a neon-wrapped Dodge Charger.

If you want more control—say, to stagger distributions, restrict use to education or housing, or protect funds from creditors or spendthrift tendencies—a revocable or irrevocable trust is almost always the better play.

Real-World Examples from Jupiter and Palm Beach County

Case Study #1: The Early Investor

A grandfather in Jupiter sets up a UTMA account for each of his three grandchildren, seeding them with $10,000 each in index funds. By age 18, the accounts have grown to $22,000. The grandchildren use the money for books, tuition, and one unforgettable semester abroad. A classic success story.

Case Study #2: The Unplanned Inheritance

A Palm Beach Gardens client gifted $100,000 into a UTMA account for her grandson, intending it for law school. At age 21, the grandson dropped out, bought a sports car, and disappeared to L.A. for a screenwriting dream. The client called us—too late. The gift was irrevocable. The money was gone.

Case Study #3: The Smart Strategist

A couple with multiple grandchildren created a Florida irrevocable gifting trust with staggered distributions: 10% at age 25, 20% at 30, 30% at 35, and the rest at 40. UTMA accounts were used for smaller gifts (under $15,000 per year) to support early milestones, while the trust preserved their larger legacy—and peace of mind.

Still not sure? That’s where we come in.

Your Legacy Deserves More Than Guesswork

At Welch Law, PLLC, we don’t believe in one-size-fits-all estate planning. We believe your gifting strategy should reflect your values, protect your wealth, and empower your grandchildren for a lifetime—not just a weekend.

If you’re considering a gift to a grandchild—whether $5,000 or $5 million—let’s make sure it’s structured the right way, under Florida law, with your goals at the center.

Located in Jupiter, Florida, Welch Law, PLLC helps families throughout Palm Beach County, from Tequesta to Wellington, craft gifting strategies that build legacies.

Schedule a consultation today.

Call us at (561) 408-6958 or visit www.welch.law.

By:  Edward J. Welch, Esq. ||| Estate Planning | Wills | Trusts | Asset Protection | Welch Crypto Trust™

If you would like to discuss your legacy options with an estate planning attorney in Jupiter or Palm Beach Gardens, Florida, schedule a complimentary call with Edward J. Welch at Welch Law, PLLC.  At Welch Law, WE WANT TO DRAFT YOUR LEGACY!

Reference: Fidelity Investments (Jan. 16, 2025) “Must-know facts about UGMA/UTMA custodial accounts”