(FORTUNE Magazine) – What do you do when a child is about to come into a pile of money that's been growing faster than he has? That's the question on the minds of a lot of people who set up accounts for their kids or grandkids under the Uniform Transfers to Minors Act. Such "custodial" accounts are managed by a designated custodian until the children become adults (at 21 in most states but 18 in some), at which point the children get the money outright.

People commonly contribute relatively small amounts to the accounts. For example, an individual might give up to $10,000 per year, a couple up to $20,000, the maximum you can give away to any one person annually without owing gift or estate taxes on the money. (Note: If the gift giver is also the custodian, the money gets counted in his or her taxable estate.) But the bull market has ballooned many custodial accounts. Attorney Kenneth Brier of Boston's Bingham Dana likens these accounts to Ferrari Trusts: "If a 21-year-old comes into that much money, what do you think he is going to do with it?"

New York lawyer Steven Chill of Golenbock Eiseman Assor & Bell says he hears from a worried client about once a week. Recently it was the father of three children, ages 10, 8, and 7, whose custodial accounts had swelled to six figures. Because the "problem" (every kid should have such problems) was caught early, Chill advised the father to set up a trust for each child for all future gifts. A properly drafted trust can live on past a child's 21st birthday yet still qualify for the annual exclusion from gift and estate taxes.

As for the money left in the custodial accounts, the custodian has no authority to put it in the trusts. But once the children turn 18, he can ask them to set up additional trusts for themselves and assign their interests.

Of course, you have to get the kids to agree to this, "and that is always the killer," says Gail Cohen, chief trust counsel for Fiduciary Trust Co. International. She recently dealt with a father who said his teenager would never agree to put his $700,000 custodial account in trust. The father wanted to do it anyway, without the child's knowledge. Cohen suggested he get a lawyer.

Some 18-year-olds will sign whatever Mom or Dad puts in front of them, especially if they are led to believe that if they cooperate they'll get more goodies. But even if they do sign, they may later claim that they didn't know what they were doing or that they were coerced. Cohen recalls one such beneficiary who, in middle age, got a judge to agree to pay out her $3 million trust by claiming she was under economic duress.

That's why some lawyers are recommending a still widely undiscovered technique involving family limited partnerships. Here, the custodian invests the custodial-account assets in a family limited partnership in exchange for a limited partnership interest. When the custodial account ends, the child gets the interest in the partnership rather than, say, marketable securities. And since the partnership interest isn't liquid, the child gets only distributions. Since a partnership is simply a joining together of two or more people, you could establish a family limited partnership for yourself and just one child. Or, if you have several kids with custodial accounts, you could combine them all in one partnership--giving you economies of scale and lower investment costs. Most partnership agreements fix the date the partnership will end--for example, when the general partner dies--and the shares are paid out to the limited partners.

You don't need a reason to set up a family limited partnership, but attorney Brier says you ought to have one other than protecting a child from himself or herself, particularly if you pull this off on the eve of the child's 21st birthday. If the child later challenges the maneuver, a judge will examine whether the custodian acted in the child's best interest and whether there was a legitimate reason for the transaction.

Note: This will work only where the custodian has the power to invest in a partnership. Typically, that is the case for accounts set up under the Uniform Transfer to Minors Act but not for those established under the older Uniform Gifts to Minors Act, which is still the law in a small minority of states.

HAVE A QUESTION? You can e-mail Carolyn at moneymanager@fortunemail.com and browse her column at www.fortune.com/investor/moneymanager.