Investing in a Child’s Future (When You’re Not the Parent)

Recently, I was at a private salon-style gathering in a room filled with women building unbelievably cool things: bioscience founders, environmental scientists, women shaping government policy, and rethinking entire industries.

My first thought was:
These women are incredible. How do I get to be in rooms like this more often?

And then, I shared what I was building at Endowe and was excited to see how many of them lit up—especially the aunties, godparents and grandparents.

Not necessarily because they were parents, but because they all had a shared experience.

They had each wanted to help secure the financial futures of their nieces, nephews, godchildren or grandchildren, but kept getting stuck with the current tools in the market.

They didn’t want to buy more toys or hand over cash or a check that would never make into an actual investment account. So most of them either ‘virtually’ designated a portion of their own investment accounts for their loved one or simply gave up.

If you’re someone who loves a child deeply, as an aunt, uncle, godparent, grandparent, or close family friend, this is for you.

I’ll talk about one of the most underused tools hiding in plain sight: UTMA and UGMA accounts, and why they might be one of the most powerful ways to quietly change a child’s financial trajectory.

So… what exactly is a UGMA or UTMA account?

First question: What tools already exist that allow someone who isn’t the parent to quietly build long-term wealth for a child?

Answer: UGMA and UTMA accounts. Most people have heard of these but few really understand them.

At its core, a UTMA or UGMA account is simply a custodial investment account for a minor.

It allows an adult to open and manage an investment account on behalf of a child until that child reaches adulthood (usually 18–21, sometimes 25 depending on the state).

For any definition-nerd, here’s what they stand for:

• UGMA = Uniform Gifts to Minors Act.

• UTMA = Uniform Transfers to Minors Act.

They were created decades ago to make it easier to transfer assets to children without setting up a complicated trust.

Think:

✔️ No lawyers required.
✔️ No trust documents.
✔️ No five-figure minimums.

Just an adult custodian, a child beneficiary, and an investment account that legally belongs to the child. Simple, right?

From my viewpoint as a founder, I find this fascinating.

The infrastructure to gift ownership (and not consumption) has been sitting there the whole time. It just hasn’t been packaged in a way that makes aunties, godparents, and grandparents feel empowered to use it.

And once you start digging in, you realize there are some pretty powerful and under-discussed things about UGMA and UTMA accounts.

Things Most People Don’t Know About UGMA/UTMA Accounts

1. You do not have to be the child’s legal guardian to open one

This surprises almost everyone.

A custodial account does not have to be opened by a legal guardian.
Any adult, including parents, grandparents, relatives, or even family friends can open a custodial account (UGMA or UTMA) for a minor.

All you need is:

• The child’s legal name

• Social Security Number

• Date of birth

You don’t have to wait for the parents to “set something up.” You can take initiative.

2. The money legally belongs to the child immediately

Once you contribute to a UTMA/UGMA, it’s an irrevocable gift. You can’t take it back.

That might sound scary but it’s also what makes it powerful.

It’s not “maybe someday” money.
It’s legally theirs.
You’re transferring ownership, not just giving them some spending cash.

That sends a very important psychological signal.

3. It’s not restricted to college

Unlike a 529 plan, UTMA/UGMA funds are not limited to education.

When the child reaches the age of majority, they can use it for:

• College

• Starting a business

• A down payment

• Investing further

• Or anything else legally allowed

If you’re helping a niece or godchild and don’t want to assume their life path, that flexibility matters.

4. It can hold more than just stocks (especially UTMA)

UGMA accounts are generally limited to financial assets such as cash, stocks, bonds, and mutual funds

But UTMA accounts can hold a broader range of assets (depending on the state) such as real estate, private business interests and intellectual property. I won’t get into too much details here

From a generational wealth perspective, that flexibility and ease can be very useful.

5. The tax treatment can be more favorable than keeping assets in your own name

A child’s unearned income (investments, dividends, interest) in a custodial account is taxed under the child’s tax structure (i.e., subject to “kiddie tax” rules).

In many cases:

• The first portion of unearned income is tax-free → For 2025-2026, $0 - $1350

• The next portion is taxed at the child’s rate → For 2025-2026, $1351 - $2700

• Only income above certain thresholds is taxed at parent rates → For 2025-2026, above $2700

For long-term investing, that can create a compounding advantage.

6. Multiple people can contribute

This is one of the most underused aspects.
A UTMA/UGMA doesn’t have to be a one-person effort.

Grandparents, aunts, uncles, godparents, family friends—everyone can contribute to the same custodial account.

Instead of 20 toys at a birthday party, imagine 20 small investments.
Over 18 years, that adds up.

7. It removes assets from your estate

If you’re a grandparent thinking long-term, contributions to a custodial account are considered completed gifts.

That means they’re removed from your taxable estate (subject to annual gift exclusion limits).

You get to see the impact during your lifetime, while also planning wisely.

8. Yes, the child gains control at adulthood and that’s intentional

At the age of majority, the child gains full control of the account.

Some people see this as the downside.

But if you’ve spent years talking to them about ownership, investing, and compounding, it can become one of the greatest gifts you give them: trust and autonomy.

Where UTMA/UGMA Fall Short

UTMA and UGMA accounts are powerful, but they weren’t designed for modern gifting.

They weren’t built to be social, easy to share with a wider circle, or seamlessly integrated into birthdays, baby showers, or holidays.

❌ There’s no easy way to leverage a circle of family and friends.
❌ No simple link to share for birthdays, baby showers, holidays or other celebratory events.
❌ No intuitive experience that turns 20 small gifts into one coordinated investment strategy.

The infrastructure exists. But the user experience hasn’t caught up.

That’s why my team and I are building Endowe. Not to replace custodial investing, but to make it seamless for the aunties, uncles, godparents, and grandparents who already want to use it.

To make long-term ownership as easy to give as anything else on a registry.

As I sat in that salon room surrounded by brilliant women building the future, I thought: this is what ownership looks like.

And the simplest way to extend that ownership forward to their grandkids, godchildren, nieces and nephews, isn’t another toy or another savings bond.

It’s compounding equity and a financial head start.

Sometimes the most powerful thing we build in a room isn’t for ourselves. It’s what we choose to build for the next generation.

With lots of love,
Your godmother Ada