Page 23 - AAA Every Day – AAA Hudson Valley – March/April 2020

Custodial
Accounts for Minors
What are They and Why Should I Get One?
If you’re looking to invest in your child’s future, a custodial account might be the right choice for you. Learn what they are and how one can benefit your family.
What is a custodial account?
Custodial accounts are a type of arrangement in which an adult opens a financial account for a minor. The details around such programs (including roles and responsibilities) vary by state and further information can be found in state statutes (e.g., Uniform Transfers to Minors Act). Funding for such accounts can be money the minor is entitled to receive or a gift from an adult. The adult controls this account for the minor until they reach a specified age, which varies by state and other factors. Generally, the specified age is 18 or 21, or even extended to 25, at which point the custodian turns over the funds to the former minor.
What are the benefits of opening one?
Custodial accounts are a great way to save for a child’s future without many of the expenses and complications that come with opening a trust fund. Plus, you
might enjoy some tax advantages. Please see a tax professional for information on potential tax advantages. Custodial accounts might not be for everyone (e.g., such accounts might have an impact on a student’s financial aid).
Consider opening a custodial CD, Money Market, or Online Savings account to invest in your child’s future. To learn more about deposit accounts at Discover Bank®, call 1.800.347.7056.
Discover Bank®, Member FDIC
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