By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.
When a UTMA account reaches the termination age set by state law, the custodianship ends and the custodian must hand the money to the child, who then owns and controls it outright. In California that age is 18 by default, or up to 21 (lifetime gifts) or 25 (transfers under a will or trust) if the delay was written into the original transfer. In Washington, most gifts end at 21, and the person making the transfer could have extended it to 25 when naming the custodian.
Nothing about the gift can be taken back at that point. A parent cannot keep the account, pick a new beneficiary, or hold the money until the child “seems ready.” For a family whose kids are still under 12, that date is years away, which is exactly why the decisions that matter are the ones made now.
UTMA termination ages in California and Washington
“Age of majority” is the phrase people search, but UTMA law uses its own termination age, and it is not always the same as the age of legal adulthood. It depends on the state whose law governs the account and on how the money got into it.
| How the money was transferred | California | Washington |
|---|---|---|
| Lifetime gift (parent, grandparent, relative) | 18, unless the transfer names a later age up to 21 | 21, or up to 25 if extended when the custodian is first named |
| Under a will or trust | 18, unless the instrument names a later age up to 25 | 21, or up to 25 if extended when the custodian is first named |
| By another fiduciary or an obligor (for example, a settlement or a payment owed to the child) | 18, except that a trustee making the transfer can name a later age up to 25; a transfer by an obligor always ends at 18 | 18, unless the custodianship was extended (up to 25) when the custodian was first named; for a transfer by an obligor, the person nominating the custodian or the court can make that extension |
Sources: California Probate Code §3920.5 and RCW 11.114.200. In California, a later age only applies if the transfer itself says so, typically in the account title: “as custodian for [child] until age 21 under the California Uniform Transfers to Minors Act.”
Two practical points for families who move between the Bay Area and Seattle, or plan to. First, a custodianship stays governed by the state law it was created under, even after the family moves (California Probate Code §3902). Second, the brokerage paperwork is what the custodian and the firm will actually follow, so check what your account title says rather than assuming the default.
What happens on the termination date
- The custodian’s authority ends. The custodian must transfer the assets to the now-adult child. Brokerages typically send a notice and require a form; many restrict the account until the transfer is done.
- The child gets full legal control. The money can be spent on anything: tuition, a car, a gap year, or nothing sensible at all. The parent’s wishes carry no legal weight.
- The account was always the child’s. A UTMA gift is irrevocable from day one. The termination date only changes who manages it, not who owns it.
- Tax reporting barely changes. UTMA income was always the child’s income, under the child’s Social Security number, and was generally reported on the child’s own return (parents can elect to report it on theirs only in limited cases). After the transfer the child keeps reporting it, and the kiddie tax may still apply (see below).
For more on what the custodian can and cannot do before that date, see can a custodian withdraw from a UTMA.
The kiddie tax often lasts past the termination date
Many parents assume the kiddie tax stops at 18. For families who pay for college, it frequently does not. Under the Form 8615 instructions, the kiddie tax can apply to a child who is 18, or a full-time student aged 19 to 23, whose earned income is not more than half of their own support. A college student whose parents pay tuition and housing usually fits that description.
For 2026, the first $1,350 of a child’s unearned income is tax-free, the next $1,350 is taxed at the child’s rate, and unearned income over $2,700 is taxed at the parents’ rate (Rev. Proc. 2025-32). So a California UTMA that terminates at 18 can hand a college freshman full control of the account while the gains are still taxed at the parents’ federal rate.
Worked example: a $1.1 million California household
Assumptions (illustrative): a San Mateo couple, a Genentech scientist and a physician, with W-2 income of $1.1 million and federal taxable income well above $613,700, so their long-term capital gains rate for 2026 is 20%. Grandparents opened a California UTMA for the couple’s son, now 8. By the time he is 18 the account holds $150,000, of which $70,000 is unrealized long-term gain. No later age was written into the transfer, so it terminates at 18.
- If he sells everything at 19, as a full-time student supported by his parents: the kiddie tax applies. Roughly $70,000 minus $2,700, or $67,300 of the gain, is taxed at the parents’ 20% federal rate: about $13,460 in federal tax, plus California tax, since California taxes capital gains as ordinary income with no lower rate.
- If he sells at 24, with the gain still $70,000, no other income and the kiddie tax no longer applying: the 2026 single standard deduction of $16,100 leaves $53,900 of taxable income. The first $49,450 falls in the 0% federal long-term rate and $4,450 is taxed at 15%, about $668 in federal tax. California still taxes the gain at his own ordinary rates.
The federal difference is roughly $12,800 on the same account. The catch is the whole point of this article: at 19 the decision is his, not his parents’. Whether he waits depends on whether anyone ever explained to him why waiting could matter.
Decisions to make while your kids are under 12
1. Check the termination age on every existing account
Pull the account titles for each UTMA, including ones grandparents opened. If a California account says nothing about age, assume 18. You generally cannot extend the age on an existing custodianship after the fact.
2. Decide where new gifts should go
New money does not have to go into the same UTMA. The $19,000 per-recipient federal gift tax annual exclusion for 2026 (Rev. Proc. 2025-32) applies equally to a UTMA or a 529 plan; there is no separate UTMA contribution limit. A gift to a trust qualifies only if the trust is drafted so the gift counts as a present interest, because gifts of future interests are not covered by the annual exclusion (Form 709 instructions). For relatives giving large amounts, a new UTMA opened with a later termination age (21 in California for lifetime gifts), a 529 plan the parent owns, or a trust for the child can each keep control longer. In Washington, extending a UTMA past 21 may cause the gift not to qualify for the annual exclusion; the state requires brokerage forms to carry that warning (RCW 11.114.200). Guidance on setting up the account itself is in how to establish and manage a UTMA.
3. Spend the account on the child, before the date, where it makes sense
The custodian can use UTMA money for the child’s benefit, such as enrichment programs, camps or a first computer. It should generally not replace what parents are already legally required to provide. Spending down is a legitimate lever, but only for real expenses for the child.
4. Understand what converting to a 529 does and does not do
Some plans accept UTMA money into a custodial 529. The assets must be sold first, which can trigger capital gains under the kiddie tax, and the 529 still belongs to the child, whose control passes at the termination age. It can change the tax treatment of future growth. It does not solve the control question.
5. Keep financial aid in proportion
UTMA assets count as the student’s own assets on the FAFSA, which weighs them more heavily than parent assets. At a household income of $750,000 or more, need-based aid is often limited either way, so for most of our readers control and taxes matter more than aid formulas.
Common mistakes at the handover
- Assuming the brokerage will hold the account past the termination date because the parent asks. It will not.
- Selling a large position just before or after 18 without checking whether the kiddie tax still applies.
- Letting the transfer be the first conversation the child ever has about the money.
- Forgetting a UTMA a grandparent opened years ago in another state. Its rules, and its termination age, may differ.
What happens at 21 specifically is covered in what happens to a UTMA when the child turns 21.
What to document for your kids before the handover
The law gives your child the money. It does not give them your reasoning. As Kevin Luu puts it: “Your kids will inherit your money. Will they inherit your judgment?”
A one-page note filed with the account can do much of the work: who gave the money and why, what you hoped it would be used for, how you would think about the capital gains timing in the example above, and what you would do if you were 19 and the account were yours. Written when your children are young and updated every few years, it becomes part of the family’s FamilyKnowledge® Library. By the handover, the account arrives with context instead of as a surprise. Our Age Five Wealth Education work is built around exactly this kind of record.
Frequently asked questions
Can I change the UTMA termination age after the account is open?
Generally no. In California and Washington a later age has to be set in the original transfer or when the custodian is first named. For new gifts you can open a separate account with a later age written into the title, or use a 529 plan or a trust. Existing money stays on its original schedule, so check the account title rather than relying on memory.
What if my child is not ready to manage the money at 18?
Legally, readiness does not matter; the custodian must transfer the assets at the termination age. What parents can influence is preparation: spending some of the account for the child’s benefit beforehand, directing new gifts elsewhere, and explaining in writing how the family thinks about the money. Those steps work best when started years before the date.
Does moving from California to Washington change the age?
No. Under California Probate Code §3902, a California custodianship remains governed by California law even if the family, the child or the custodian later moves. A new account opened after the move may be set up under Washington law, so a family can end up with accounts on two different schedules. Keep a simple list of each account and its age.
Next step
This week, pull the account title for each UTMA your children own and write down its termination age and current unrealized gain. If a date or a number surprises you, that is the conversation to have now, not at 18. Our estate planning team can review custodial accounts alongside your trust and guardianship documents as part of the Tax & Wealth Assessment.
This is general education, and the right move depends on the family’s full picture.
Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.
Connect on LinkedIn → · About KevinThis is part of how we approach Age Five Wealth Education for high-income W-2 families at Bright Advisers.
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