Custodial account

Custodial account

A custodial account is a financial account set up for the benefit of a beneficiary, and administered by a responsible adult, known as a custodian who has a fiduciary obligation to the beneficiary.

In one form, a custodial account is an account set up for a minor, because the minor is under the legal age of majority. The custodian is often the minor's parent. A custodial account can be a bank account or a trust fund or a brokerage account. This type of account usually come with a Coverdell ESA Form a tax advantaged contract. It deals with successor rights and other contract conditions depending on who issues the form.

In another form, a custodial account is a trust account owned by an individual or institution, managed by a named party for purposes of rapid distribution of funds in that account. This is commonly used for petty cash, or for transactions that have very limited and clearly defined payees and transaction types. For example, law firm accounting includes trust accounts for disbursing funds entrusted to the law firm by each client for the client's benefit.

References

Legal Definition

See also



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  • custodial account — ➔ account1 * * * custodial account UK US noun [C] ► US BANKING a bank or investment account that is set up and managed for someone else, for example, by a child s parents: »The law permits you to use the money in a custodial account as long as it …   Financial and business terms

  • Custodial Account — A Custodial account is a financial account set up for a minor, but administered by a responsible adult, known as a custodian, because the minor is under the legal age of majority. The custodian is often the minor s parent. A custodial account can …   Wikipedia

  • Custodial Account — 1. An account created at a bank, brokerage firm or mutual fund company that is managed by an adult for a minor that is under the age of 18 to 21 (depending on state legislation). 2. A retirement account managed for eligible employees by a… …   Investment dictionary

  • custodial account — An account established on behalf of someone else. For example, when a parent opens an account for a minor child, or when a son or daughter opens and controls a bank account of an infirm parent …   Black's law dictionary

  • custodial account — An account established on behalf of someone else. For example, when a parent opens an account for a minor child, or when a son or daughter opens and controls a bank account of an infirm parent …   Black's law dictionary

  • custodial account — noun a brokerage firm account that parents have created for a minor • Hypernyms: ↑cash account …   Useful english dictionary

  • custodial account — /kʌ stəυdiəl əˌkaυnt/ noun an account in which money is held for someone, usually a child, by a custodian …   Dictionary of banking and finance

  • Bank Trust Custodial Account — A type of Individual Retirement Account (IRA) allowed by the Employee Retirement Income Security Act of 1974 (ERISA) in which contributions are paid into the bank s interest bearing financial instruments or a self directed account. The difference …   Investment dictionary

  • account — a record of a business transaction. When you buy something on credit, the company you are dealing with sets up an account . This means it sets up a record of what you buy and what you pay. You will do the same thing with any customers to whom you …   Financial and business terms

  • custodial fee — UK US noun [C] ► BANKING an amount of money charged by a bank or other financial organization for managing an account, investment, etc.: »Each year, an annual custodial fee is assessed to individual retirement and education savings accounts …   Financial and business terms

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