If Something Happens to You: Who Takes Over Your Kid’s Accounts

You opened the custodial account, the 529, maybe a custodial Roth. The question almost nobody answers next: who runs these if something happens to you? Each account type has a different answer, and in every case it lives on a form at the institution, not in your will and not in MemoryBank.

The short version

The UTMA: already the child's

A custodial account belongs to the child from the day it's opened. You are the custodian, a manager, not an owner. So if the custodian dies, the account is not part of their estate and doesn't go through probate. What matters is whether a successor custodian was named.

Most brokerages have a short form for this, and the law lets a custodian designate a successor in writing. If nobody was named, state law fills the gap: in many states a child who is 14 or older can designate one, and otherwise a guardian or a court does. That is slow and public. The fix is a form that takes five minutes.

The 529: yours, so it needs a successor owner

A 529 belongs to the account owner, usually a parent, not the child. If the owner dies, control passes to the successor owner named on the account. The successor takes over fully: they can change the beneficiary, take withdrawals, and keep the tax treatment.

With no successor named, the plan's own rules decide. In many plans the account becomes part of the estate and waits on probate, with the beneficiary unable to touch it for college in the meantime. Plans label the setting slightly differently, often "successor owner" or "contingent account owner."

The custodial Roth: same as the UTMA

A custodial Roth IRA is the child's own retirement account with a parent as custodian, so the custodian role passes the same way a UTMA does, through the brokerage's successor custodian form. The account itself was always the child's.

Your own accounts: the beneficiary form wins

Your IRA, Roth IRA, 401(k), brokerage account and life insurance each carry a beneficiary or transfer-on-death designation, and that designation overrides whatever your will says. An old designation stays in force until you change it, which is why these are worth checking after a birth, a divorce or a move.

The trap is naming a minor child directly. Institutions cannot hand money to a minor, so a court appoints a guardian of the estate to manage it until the age of majority, with reporting to the court along the way. Then the child receives everything outright at 18 or 21. The usual alternatives:

• Name a custodian for the child under your state's UTMA. The designation reads something like "Jane Doe, as custodian for Sam Doe under the [State] UTMA." A person you chose manages it until the transfer age.
• Name a trust. A trust lets you set the ages and purposes yourself, and can hold the money well past 21. A trust as an IRA beneficiary has its own rules, which is an estate attorney question.

How fast an inherited IRA has to be emptied

There is no step-up in basis on an IRA, Roth or traditional. The step-up applies to assets you own outright, like a brokerage account. See step-up in basis, explained.

Two things people confuse

• Guardian of the person vs. guardian of the money. Naming a guardian for your child in your will is about who raises them. Who manages the money is a separate decision. They can be the same person or different people.
• Visibility vs. authority. Giving a second adult visibility, such as a co-parent in MemoryBank, is not legal authority over the accounts. Only the institution's successor and beneficiary forms grant that.

Estate, custodial and beneficiary rules vary by state and change. MemoryBank is an education and display tool, not a financial, tax or legal advisor. Confirm anything here with an estate attorney or financial professional before acting.

MemoryBank is not a brokerage. It cannot receive, keep or transfer securities. Every designation described here is set at the financial institution holding the account.

Frequently asked questions

What happens to a UTMA account if the custodian dies?

The account already belongs to the child, so it is not part of the custodian's estate and does not go through probate. A successor custodian named on a form at the brokerage steps in. If none was named, state law decides: in many states a child who is 14 or older can designate one, and otherwise a guardian or a court does.

What happens to a 529 plan if the account owner dies?

Control passes to the successor owner named on the account, who can change the beneficiary, take withdrawals, and keep the tax treatment. With no successor named, the plan's rules decide, and in many plans the account becomes part of the estate and waits on probate.

Can I name my minor child as the beneficiary of my IRA or brokerage account?

You can, but institutions cannot hand money to a minor, so a court appoints a guardian of the estate to manage it until the age of majority, and the child then receives it outright at 18 or 21. The usual alternatives are naming a custodian for the child under your state's UTMA, or naming a trust that sets the ages and purposes.

How long does my child have to withdraw an inherited Roth IRA?

A minor child of the account owner can take small annual withdrawals based on life expectancy until age 21, then must empty the account within 10 years. A grandchild, niece or nephew is on the 10-year clock from the start. Qualified Roth withdrawals are generally tax-free; inherited traditional IRA withdrawals are taxed as ordinary income.

Does my will control who gets my retirement accounts?

No. The beneficiary or transfer-on-death designation on each account overrides the will, and an old designation stays in force until you change it. Check them after a birth, a divorce or a move.

What to do this week

1. Ask your brokerage for the successor custodian form for each UTMA and custodial Roth, and file it.
2. Log in to each 529 and confirm a successor owner is named.
3. Open the beneficiaries section on your own IRA, 401(k), brokerage and life insurance. If a minor is named directly, ask an estate attorney about a custodian or trust designation instead.