Glossary

UTMA custodian

An adult who manages money, such as life insurance proceeds, for a minor under a state's Uniform Transfers to Minors Act until the child comes of age.

Also called: UTMA custodianship, Uniform Transfers to Minors Act custodian, custodian for a minor

Insurers generally won't pay life insurance proceeds directly to a minor child. A UTMA custodian solves that problem: under the Uniform Transfers to Minors Act, adopted in nearly every state, you can name an adult to receive and manage property for a child, for example "Jane Smith, as custodian for Alex Smith under the [state] Uniform Transfers to Minors Act." The custodian must use the money for the child's benefit and keep it separate from their own.

Custodianship ends at an age set by state law, usually 18 or 21, and some states let the person creating it extend it to 25. At that point the young adult gets full control of whatever is left. Hypothetically, a $250,000 policy paid to a custodian for a 10-year-old could cover school and living costs, with the balance handed over at 21 in a state where custodianship ends then.

A UTMA designation is simpler and cheaper than a trust and avoids a court-appointed guardianship. Its limits: you can't set conditions or stagger payouts, the money must be turned over at the statutory age, and large sums may be better held in a trust. Without a named custodian, a court may need to appoint someone. See naming a minor child as life insurance beneficiary and how life insurance is paid to a minor.

Last reviewed October 4, 2026

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Related terms

Beneficiary designation The signed instruction on file with an insurer naming who receives a policy's proceeds, in what shares and in what order. Primary beneficiary The person, trust, charity or estate first in line to receive a life insurance death benefit when the insured dies. Trustee The person or institution that holds legal title to trust assets and manages them for the beneficiaries under the trust's terms and fiduciary duties. Testamentary trust A trust written into a will that comes into existence only after death and probate, often to manage money for minor children. Fiduciary A person or firm legally bound to act in someone else's best interest with loyalty and care, such as a trustee, executor or registered investment adviser.

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