Kurt Supe, CPA & Retirement Planner@KurtSupeCPA
Grandmother is absolutely Furious.
She'd been putting $5K/year into an investment account for her grandson since he was born.
18 years. $90K deposited. Grew to $215K.
"This was supposed to teach him about investments. Help with college. Give him a real head start in life."
Grandson turned 18 last month.
$72K lifted truck. Moved into a luxury apartment with his girlfriend. Dropped out of college. No job. Living off the account, gone in less than a year.
The money? Legally 100% his. Grandma has zero say.
"I spent 18 years building that. He's blowing through it in 12 months."
The problem:
She set up a UTMA account (Uniform Transfers to Minors Act).
The day he hits 18, he owns it completely. No conditions. No veto power.
You wanted compounding? He learned depreciation. You wanted education? He wanted a sound system.
What she SHOULD have done:
Option 1: 529 plan
With a 529, YOU control it forever:
→ College? Tax-free for education
→ No college? Roll $35K into a Roth IRA for them
Buys a truck? Change beneficiary to another grandkid → Need it out? Pay taxes + 10% penalty on gains
Option 2: Keep it in HER name
Open a separate investment account. Gift assets to him over time—or when he proves he's responsible.
Your money. Your timeline. Your conditions.
Is losing 10% of gains to penalties better than losing 100% to an 18-year-old's judgment?
With a UTMA: You fund their decisions at 18.
18 years building $215K.
12 months burning through it on a truck, luxury rent, and zero plan.
The account structure you pick is the difference between funding their future and funding their mistakes.
