Custodial Account

Business / Taxes / Custodial Account: If you want to make investments on a minor’s behalf, or transfer property you own to that person, you can open a custodial account with a bank, brokerage firm, mutual fund company, or insurance company. You name an adult custodian for the account — either yourself or someone else — who is responsible for managing the account until the child reaches the age of majority. That age may be 18, 21, or 25 depending on the state and the type of account you choose. At majority, the child has the legal right to control the account and use the assets as he or she chooses. There may be some tax advantages in transferring assets to a minor. If the child is under 18, investment earnings above a specific level that Congress sets each year are taxed at the parents' marginal tax rate. But if the child is 18 or older, all investment earnings are taxed at the child's rate — again, typically the lowest rate. In addition, gifts you make to the account are no longer part of your estate, which may reduce vulnerability to estate taxes. However, it’s wise to review your plans with your legal and tax advisers. One drawback of a custodial account is that the assets are considered the property of the child, and may reduce the amount of financial aid the child qualifies for when he or she enrolls in a college or university.

Other Words for Account

Account Noun Synonyms: calculation, accounting, reckoning, computation, (financial) statement, enumeration
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Market Adjustment-Trading Securities Account

Business / Accounting / Market Adjustment-Trading Securities Account: An account used to track the difference between the historical cost and the market value of a company's portfolio of trading securities. MORE

Medical Savings Account (MSA)

Health / Health Insurance / Medical Savings Account (MSA): A trust that employees of small businesses may establish to pay for out-of-pocket medical expenses. MORE

Medical Savings Accounts (MSA)

Business / Human Resources (HR) / Medical Savings Accounts (MSA): Savings accounts designated for out-of-pocket medical expenses. In an MSA, employers and individuals are allowed to contribute to a savings account on a pre-tax basis and carry over the unused funds a MORE

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