The Problem With UGMA UTMA Account is when parents try to take it back, its FRAUD.
https://www.youtube.com/watch?v=dhDsiuBM2KI&t=1s
Imagine you open a savings account for your child at the local bank, depositing $10,000 in the hope that they will someday use it to pay for college. You put their name on the account and name yourself as the custodian. Every single financial institution that permits this sort of setup structures the title as a "UTMA account." The next week, you get hit with an enormous medical bill that threatens your solvency—you might have to declare bankruptcy unless you can work something out. In a panic, you go back to the bank, withdraw the $10,000 you put in your child's account and figure you'll replace it later.
Or how about this scenario: Your mother passes away and leaves your five-year-old daughter (her granddaughter) $150,000. She names you as successor custodian to a brokerage account she established, stuffed with blue-chip stocks like Coca-Cola, Colgate-Palmolive, Johnson & Johnson, Hershey, and Procter & Gamble. When your daughter is 13 years old, she breaks her leg in a sporting accident at a time when you are unemployed and have no health insurance. You decide to withdraw a few thousand dollars to pay her medical bills out of her account.
Here's one last hypothetical: your brother decides to give your son (his nephew) a check for $1,000 each Christmas to help pay for college. The check is made out to "[Your name] as custodian for [nephew's name]." You deposit the money in your checking account and make a rough back-of-the-envelope calculation, so you have a decent idea of what should be available for your son. Over the years, your brother gives you a total of $18,000. When your kid reaches adulthood, he asks for his money. You have $7,000 in your checking account and tell him, "We used it on the family over the years, but here's what I can give you right now." You write a smaller check.
Each of these scenarios broke the law in a significant, serious way. In the process, you've opened yourself up to everything ranging from criminal prosecution to civil lawsuits. Legal proceedings could result in the restitution of the funds you took, payment of foregone investment income that should have been generated, attorney fees, and a host of other expenses that can (and probably will) be more costly than the money you used. This may come as surprise to those who don't spend a lot of time considering financial law, but in the United States, a child's money does not belong to the child's parents or guardians.
The Reason Your Child's UTMA Assets Are Protected from You
Legally speaking, two things occurred the moment assets were gifted under the UTMA law. These occur whether or not the donor is fully aware of UTMA restrictions on withdrawals: