<prompt> Human: My BIL passed away recently leaving my sister and nephew 2 yo as direct beneficiaries to his life insurance. Ive been trying to guide my sister in handling her sons estate while he matures. The intent is to gain as much as possible by the time he turns 18, so savings is out.Since the money is already in his name she is a legal guardian, are there any catches with the UTMA account I may not be aware of? Does anybody have any other suggestions to gain as much as possible over the next 16-19 years? Wed like to see him start his life not having to worry about money for major life events wedding, home car deposits, etc things his dad would have wanted to contribute to.Is a trust a potential option if he was the named beneficiary? Shed like him to grow up a little more than 18 before getting access to that kind of money.  <response>: One important thing to understand about UTMAs are the tax issues, the so-called kiddie tax. Any realized gains you have in the UTMA are taxed differently than normal. It depends on the circumstances, but for most kids, the first 3,600 or so of long term capital gains will be taxed at 0 1050 standard deduction and then 2,600 in LTCG, then 15 after that. So you have to watch this carefully.x200B;There is something called tax gain harvesting that is a good thing to do in UTMAs. Heres an example of it:x200B;Say you have 10,000 in a mutual fund in the UTMA. In 15 years, it grows to 30,000. The child decides to sell all the mutual funds and use the proceeds to pay for college. When he does this, he now has 20,000 in capital gains that he has to pay taxes on. With some planning with tax gain harvesting, you can avoid this problem. The key is to sell and rebuy the same stocks every year they go up in price, as long as youve held the stocks longer than 1 year and the gains are less than the kiddie tax threshold, so by the time you sell and withdraw the stocks, the costs basis will be higher.x200B;So the 10,000 after 1 year becomes 11,000. You sell all the stocks and rebuy them, now the cost basis for those shares are 11k. You have 1k in capital gains, but you dont owe any tax on it. Then the next year theyre worth 12k, so you sell and rebuy. Again you have another 1k in capital gains 12k - 11k, but again no tax. You keep doing this every year, so by the time college rolls around, the stocks are worth 30k, but the basis will also be around 30k as well, so the taxable gains will be minimal. 