You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. The major advantage of custodial accounts is that they make it easy to give financial gifts to a child. You should begin receiving the email in 7–10 business days. In addition, because custodial assets belong to the minor, they are counted as the minor’s assets for college financial aid purposes, even though the minor does not control the account and may not even know about it.

If a UTMA savings account custodian dies before the minor is 21 years old, the designation of the successor instrument becomes effective. JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer. Frequently, the goal in setting up a custodial account is to provide funds to pay for college (see our Wealth Focus on Saving for Education for a broader discussion of college savings). However, courts will generally look to grandparents first, then siblings, then more distant relatives, as the preference. Please carefully consider the plan's investment objectives, risks, charges, and expenses before investing. Where grandparents create a custodial account and name the parents as custodians, the custodial assets may still be considered to be part of the parent’s estate, but will not be included in the grandparent’s estate. However, in this situation, many states will allow grandparents, or other relatives of the deceased parent, to petition for visitation rights. Internet Explorer 11 is no longer supported. Custodians are required to close custodial accounts when the beneficiary reaches age 18 and to hand over the account's proceeds to the beneficiary. But gifts to an individual above $15,000 a year typically require a form to be completed for the IRS.

If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona resident, you may want to consider, before investing, whether your state or the beneficiary's home state offers its residents a plan with alternate state tax advantages or other state benefits such as financial aid, scholarship funds and protection from creditors. Minors with unearned income (generally interest, dividends and capital gains), including income generated in a custodial account, generally have to file an income tax return if, among other things, their unearned income is over $1,100 (in 2020). Looking for a convenient way to manage a child's money until they grow up?

The interested adult could be an aunt or uncle, but does not have to be a relative. Firefox, or

J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. When calculating financial aid, colleges will expect that 20% of a dependent child’s assets will be used to pay for college, which is a higher percentage than other assets, including parent-owned 529 accounts. Before opening a custodial account, evaluate your goals, those of the beneficiary, and take stock of all your options to make sure that it's the right type of account for you. All information you provide will be used by Fidelity solely for the purpose of sending the email on your behalf. However, if college was paid for with other assets, or if the child attended a less expensive college than anticipated, or if the investments performed significantly better than expected, there may be a significant amount of money left in the account when the minor reaches majority. Tax laws and regulations are complex and subject to change, which can materially impact investment results. The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan are offered by the state of New Hampshire, MEFA, the state of Delaware, and the Arizona Commission for Postsecondary Education, respectively, and managed by Fidelity Investments. Conservatorships for Minors as Beneficiaries, Assets Not Included in Your Trust Can Require Probate, Probate Judges—What They Are and What They Do, Duties and Responsibilities of a Guardian or Conservator. When considering ways to save money for minor children or grandchildren, using a custodial account is the first method that commonly comes to mind, and it’s the type of account we see most frequently. Please enter a valid last name. Supporting documentation for any claims, if applicable, will be furnished upon request.

References in this report to “J.P. The same holds true for inheritances received via a last will and testament or from an intestate estate—when the deceased died without a will—or a living trust was drafted improperly, so its terms were not honored.
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Parents leaving inheritances to their minor children can avoid a lot of this difficulty by naming a conservator in their estate plans.. But when your child reaches the age of majority - 18 or 21, or even older, depending on the state - you, as the custodian, lose all control over the account.

• General Risks & Considerations If the stepparent has gone through the formal adoption procedure, they will likely have rights superior to, or at least equal to, your own. In Illinois, a custodial estate is terminated and the property will transfer to the minor or his or her estate when the minor turns either 18 or 21 depending on how the property was conveyed to the custodial estate, or when the minor passes away. If the value of property left to the minor is not significant, usually $20,000 or less, state law may allow an interested adult such as the minor's parent or grandparent to request that the minor's inheritance be placed in an account established under the state's Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA). If the transferor was the custodian and the transferor dies, some states allow the legal guardian of the child to become the new custodian of the account. Key Risks


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