To open a custodial account, all you need is basic information about your child: name, birthday and social security number. Once it’s set up, you manage all the action in the account, which revolves around deposits and deciding which assets to invest in.

What is custodial account for minors?

A custodial account is a financial account held in the name of a minor, usually by a parent, legal guardian, or another relative. If you are a parent or guardian of a young person, this gives you the opportunity to save and invest for your child while retaining full control of the account until they reach adulthood.

How to open a mutual fund account for a minor?

Complete the application by selecting “custodial account” as the account type. List the minor with her Social Security number as the owner/minor and an adult to act as the custodian of the account. The custodian, typically a parent or grandparent, has power over the account until the minor reaches legal age.

How is a custodial account set up for a minor?

While the rules for custodial accounts can vary from state to state, they generally work in the same way. Accounts are usually set up through either the Uniform Gifts to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA), both of which govern how a minor’s account is handled and controlled.

Can a custodial account be used for a grandchild?

There are tax and financial aid implications to be aware of as well as the issue of control. Using a custodial account to teach kids about saving and investing can make it even more valuable. Each of our grandchildren has a 529 account, but in addition we’d like to provide more readily available cash.

Can a custodial mutual fund be used for financial aid?

Money in a child’s name in a UTMA account will be counted as assets when applying for college financial aid. A large custodial mutual fund balance might limit the amount of aid the minor can receive.