Custodial accounts are typically set up by a parent for their minor child, although it can also be opened by an Executor after you pass away. The custodian is the person that’s put in charge of the account – you while you’re still alive and then someone of your choosing after you’re gone.
It’s fairly simple to set up through your Will. You simply state that any money the child inherits should be put into a custodial account, and then you name the custodian. If you have more than one child, each child will have their own custodial account to be used for their needs only. The Uniform Transfers to Minors Act governs the management of the account, such ashow it’s to be used.and an end date for the account to be closed. This end date in New York can be when the minor reaches age 18 or 21.
The biggest drawback to a custodial account is that the child at age 18 or 21 has total control of how the money is spent. You may want it to pay for college but when your child inherits the account, they can spend the money any way they wish.
To learn more about leaving an inheritance to your minor children, contact our office today.