UTMA and UGMA Accounts Are Not Marital Property
Uniform Transfer to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) custodial accounts hold assets that legally belong to the minor child — not to the parent-custodian. In Nevada divorce, these accounts are not marital property and cannot be divided between the spouses. A parent serving as custodian has a fiduciary duty to manage the assets for the child’s benefit, and misusing custodial funds for personal or household expenses is a breach of that duty — even during an economically stressful divorce.
How UTMA/UGMA Accounts Work Under Nevada Law
Nevada adopted the Uniform Transfers to Minors Act under NRS Chapter 167. When a parent, grandparent, or other donor transfers assets to a UTMA account for a minor child, the transfer is irrevocable — the assets legally belong to the child from the moment of transfer. The custodian manages the account in a fiduciary capacity but cannot spend the funds for their own benefit or for ordinary household expenses that are the parent’s legal obligation. The minor receives the account assets outright at age 18 in Nevada, or at a later age up to 25 if the donor specified it in the transfer instrument.
Misuse of Custodial Funds as Marital Waste
In contested Nevada divorces, one spouse sometimes drains a child’s custodial account to fund marital expenses or personal spending during separation. This is both a breach of fiduciary duty and potentially marital waste under NRS 125.150(1)(b). A parent who misuses custodial funds must restore the account from their share of community property. Courts take UTMA misuse seriously and can award attorney fees and enhanced distribution to the other spouse in recognition of the dissipation. If community property funds were originally contributed to the UTMA account during the marriage, the analysis involves both the character of the original contribution and the fiduciary breach that occurred when those funds were later misappropriated.
UTMA vs. 529 College Savings Plans in Nevada Divorce
529 college savings plans are different from UTMA accounts. A 529 plan is owned by the account owner — typically a parent — not the beneficiary child, and can be changed, redirected, or in some cases reclaimed. In Nevada divorce, a 529 plan is typically treated as community property divisible between spouses, although courts strongly prefer to preserve 529 funds for the child’s education and commonly order them left intact with the custodial parent. UTMA accounts, by contrast, cannot be reclaimed, redirected, or divided in divorce because they irrevocably belong to the child from the moment of transfer.
Child Injury Settlements as the Child’s Separate Property
A personal injury settlement or judgment obtained for a minor child’s injuries belongs to the child, not to the parents. Nevada courts require district court approval for all minor settlements under NRS 12.060, and proceeds must be protected — typically in a restricted account, structured settlement, or court-approved trust — until the child reaches majority. Parents who improperly access a child’s injury settlement funds during divorce proceedings face the same fiduciary breach exposure as UTMA misuse. If you are going through Nevada divorce and have questions about your children’s custodial accounts, injury settlement funds, or 529 plans, Hauser Family Law can help you protect both your rights and your children’s assets in Clark County Family Court.