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What is a custodial account?

A custodial account allows a parent, guardian, or other family members/friends to open an investing account for a minor. A minor’s age varies by state laws.

The custodian (adult) manages the money and investments until the minor reaches the “age of majority.” That age is usually 18 or 21 years old, depending on the Custodian’s state.

What happens when the child reaches the age of majority?

After reaching the age of majority, the minor assumes control of the account and can do as they wish with the funds.

Can the money be used before the age of majority?

In a custodian account, the parent or legal guardian can use the money for a purpose that benefits the child. This includes:

  • Paying for education (preschool, secondary, private)
  • Clothing and supplies
  • Activities (sports, instruments, etc)

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