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Investing foundations

Lesson 59 · Written for kid, teen, and little

Custodial Accounts: Yours, but Managed

Kids can't open brokerage accounts alone, so a trusted adult manages one for them.

The idea

In most of the US you have to be 18 to open your own brokerage account, so people under that age invest through a custodial account instead. A trusted adult, called the custodian, opens it and places the trades — but the money and investments legally belong to you, the minor. The custodian is only allowed to use that money for your benefit, never for their own. At an age set by your state's law, often somewhere between 18 and 25, the account becomes fully yours to control. 🔑

A

Words to know

5

Custodial account

An investing account an adult opens and manages for someone under 18. The money is the kid's; the grown-up just drives.

Custodian

The trusted adult who manages the account and places the trades. Usually a parent or guardian.

Minor

A person under the legal adult age — the one who actually owns the account. If you are 13, that is you.

Transfer age

The age, set by your state, when full control of the account passes to you. Often 18 or 21, depending on where you live.

UTMA

A common state law that lets an adult hold investments for a kid until the transfer age. It is why the account has two names on it.

Try it — no accountMatch the pairs

Match each term to what it means.

0 / 4 matched

In the full lesson

  1. 1Match the pairs
  2. 2Put it in order
  3. 3Make the call

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