The main advantage of using a UTMA account is that the money contributed to the account is exempted from paying a gift tax of up to a maximum of $15,000 per year for 2021 ($16,000 for 2022). Any income earned on the contributed funds is taxed at the tax rate of the minor who is being gifted the funds. Since the minor’s income is presumably significantly lower than that of the adult donor, this can lead to significant tax savings. One of the drawbacks of using a UTMA account, however, is that it can make the recipient less eligible for need-based college scholarship programs and other such initiatives.