As the custodian of UTMA or UGMA assets, you are responsible for investing those assets for the child’s benefit. However, once the child attains 21 years (18 in some states), that child has the absolute right to control these assets – and do with them as he or she pleases. This is one of the significant disadvantages of UTMA and UGMA accounts.
A Young Person’s Trust is a type of trust that allows you to continue to manage these assets after the child attains age of majority. The child creates his or own revocable living trust (and ancillary documents) that names you as the sole trustee and adds the child as co-trustee upon attainment of a specified age (e.g., 25 or 30). The child may be made sole trustee after a specified period. The child then funds the UTMA or UGMA assets into the revocable trust upon attaining majority. This strategy creates an estate plan for the child and, further, creates a trustee-in-training program so that the child can better manage his or her assets as trustee.