What is a Custodial Account?

A custodial account is a type of bank account that you can set up in order to assist a minor financially. Here are the basics of a custodial account and how they work.

Custodial Account

A custodial account is a type of account that you can set up that nearly any financial institution. With this type of account, you can set up a way to save money for one of your children or a grandchild. While the child is still young, you are going to be the administrator of the account. You can deposit as much money as you want into these types of accounts and there are even ways to invest the money to earn a return.

Drawbacks

One of the big drawbacks with this type of account is that you are going to lose control over the money as soon as your child reaches adulthood. In some states, this is at the age of 18, and in other states, it is 21 years old. If you have save a considerable amount of money for them, they are going to have to be able to manage this money effectively without any input from you. Some people are not comfortable giving this much money to a child at this age.


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