Newish lurker here. We aren't wealthy by some standards but through a combo of luck and hard work we are comfortable. Nonetheless i am always looking for ways to optimize...
I have been reading through the forums but have yet to get a clear answer on UTMAs.
Here is our situation and background:
DW and I are 33 and 37, respectively. Welcomed our first son 6 weeks ago.
AGI has increased greatly in the last 2-3 years. It fluctuates but should be between $500K-700K per annum for the next 4-5 years.
We were high spenders but recently embraced saving (almost) every penny. I think our spend is "only" $80-100K/year now, in a HCOL area.
$1.6M invested assets mostly in low cost index and bond funds.
Equity in our home net of $160K mortgage is about $600K.
Since we are in the top tax bracket, we are subject to 20% cap gains taxes + 3.8% for the ACA tax. No state taxes.
We will establish a 529 for college. However, in the interim, why wouldn't we transfer appreciated stock into a UTMA account to pay for childcare expenses between now and when they turn 18? My understanding is that I can sell stock up to the point where the unearned income is $2,100 and there would be no tax. Were I to sell that stock in my account, I would pay 20%+, or $420, each year. Over the course of 10 years that's $4,200 without considering compounding.
I should add that i don't like paperwork, so if i need to meticulously document what the money goes towards, that may negate the monetary benefits. However, despite our AGI, i do consider $420/year to be a lot of $ and don't like leaving $ on the table.