The Uniform Transfers to Minors Act, or UTMA, was enacted in the United States in order to help parents with these types of concerns.

The UTMA is a type of trust that you can arrange without an attorney. It can be set up at a bank or brokerage company, and requires only the minor’s social security number and a custodian named to manage your child’s account.

It’s important to remember that a custodian isn’t necessarily the same thing as a guardian. In the event of your death your child’s guardian is the person who is supposed to physically care for them. However a custodian is the person you have chosen to manage their money.

So while your chosen guardian will be a parent in your absence, this person might not be who you would choose to manage a large sum of money or assets such as real estate, stocks, bonds, collectibles and more.

Typically you can select your child’s guardian in your will, and if you want that same person to be your child’s financial custodian name them again in the UTMA account. You can also specify your custodian in the will if they aren’t the same person as the guardian so as to remove any doubt or confusion.

The money in your UTMA account will be controlled by the custodian until your child reaches a specific age, usually somewhere between 18 and 21 years old. The age of trust termination, as it is called, depends upon the state in which the account is created.

If your child reaches the age of trust termination and the funds were not used for his or her support you child will have the option of suing the custodian for spending down the UTMA account.

While it’s vital to choose the right life insurance policy to protect your family, it’s also very important to choose the right beneficiary to manage that money for your children. Their future could depend on it.

This is why it’s always a good idea to speak to a licensed insurance policy representative about these matters. Having a professional opinion is very helpful when making a decision that could impact the rest of your child’s life.