January 19, 2021
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Finance

Guide to Opening a Custodial Account

Do you want to start saving for your kid’s future? Are you planning to open a custodial account? If yes, then you are in the right place.

Opening a custodial account is a smart move. It gives you an early opportunity to save for your child’s future. The good thing about custodial accounts is that it can be opened by anyone. For example, the parents, grandparents, uncle aunt, and or any other adult person.

A custodial account allows you to invest money in stocks, mutual funds, and other securities on behalf of your child. The fund transferred to the account belongs to your child and no one else.

Can I open a Robinhood account for my child? If you are bothered by this question, go through the article to get your answers.

How To Open A Custodial Account For Kids?

An adult can open a custodial account as a custodian. The process is really simple and you don’t have to do much. To help you out, we have provided the details below.

  1. To open a custodial account, you need to provide the personal details of your child. For instance, name, birth date, and social security number.
  2. Once you open the account, you can manage it as a custodian. This means you can deposit funds, invest in stocks, and even withdraw cash when needed. However, you cannot use the withdrawn money on anything else. It has to be spent on something that benefits your child.
  3. For custodial accounts having deposits over $15,000 activates the federal gift tax.

This should have answered the question “Can I open a Robinhood account for my child” that you had on your mind.

Why Should You Open A Custodial Account?

A custodial account is one of the best ways to save for your child’s future. It comes with many other benefits as well.

  1. You can transfer funds to a custodial account without any limits.
  2. A custodial account is like a brokerage account for minors. This allows you to invest in stocks, bonds, and mutual funds on your child’s behalf.
  3. By opening a custodial account, you no longer have to worry about your child’s education and other future needs. It gives you an early opportunity to save more money for your kid.
  4. When your child comes of age, he/she can withdraw the money for his/her benefit.

A custodial account is a great way of saving for your child’s future. As parents, if you want to give your child a secure future, you should consider opening a custodial account.