Custodial Accounts for Minors
If you're looking for a simple, affordable option for setting aside money for a child, consider a custodial account. As the account owner, you can manage funds for any child typically under the age of 18 or 21 (depending on state law). The child gains control of the account upon reaching that age. In many cases, establishing a custodial account is easier and less expensive than setting up a trust, and it can be a great option for funding a child's education.
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Important Custodial Account Information
- The most common type of custodial account is the Uniform Transfer to Minors Act (UTMA) account. A few states also allow Uniform Gift to Minors Act (UGMA) accounts.
- Anyone (parents, grandparents, and others) can contribute to these accounts.
- UTMA and UGMA accounts offer flexibility in how you invest and spend funds on a child before he or she reaches the age of majority and may allow you to take advantage of the child's potentially lower tax rate.
- All funds held in an UTMA or UGMA account are irrevocably the property of the designated child and must be managed and applied for the sole benefit of that child.
- An UTMA or UGMA account cannot be transferred to another child at any time.
Opening Your Custodial Account
Your registered State Farm® agent can help explain your options to you, assist in setting up your UTMA or UGMA account, help you establish the right investment strategy, and answer general questions you may have. Or you can get started online right now by:
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