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What is a custodial account?

A custodial account allows a parent (or grandparent, other family member, or friend) to open a savings/investing account for a minor*.

Until the minor reaches the “age of majority” (usually 18 or 21 depending on the State), only the adult or ‘Custodian’ who opened the account can manage the funds. Think of the age of majority as the age the minor reaches adulthood under State Law. Importantly, money deposited into a custodial account becomes the property of the minor. The assets deposited into a custodial account cannot be taken back or given to someone else.

These funds can only be used for the benefit of the minor. Examples include things like education, child care, and other expenses.

*The age of a minor varies by state, in some states it is everyone under 18, other states consider individuals as minors until they are 21.

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