A custodial account allows you to make a financial gift to a minor—with “gift” being the key word here. When you deposit money into a custodial account, it immediately becomes the minor’s property.

Custodial accounts, also known as UGMA or UTMA accounts, can be used for any expense that benefits the minor. Things like education, extracurricular activities, music lessons or sports classes, etc. are all things that can be paid for with custodial accounts. You must be able to prove, as the custodian, that the minor directly benefits from the money being spent.

You aren’t able to withdraw money from a custodial account for your own individual expenses. If you are the beneficiary of the custodial account, you can withdraw funds once you legally become an adult. 

Need to use some custodial money for a young person? Contact Support and they’ll help you get started with a withdrawal.

DISCLOSURES

The adult (or Custodian) who opens the account can manage the money and investments until the minor reaches the “age of majority.” That age is usually 18 or 21, depending on the Custodian’s state. The money in a custodial account is the property of the minor. Money in a custodial account can be used by the parent or legal guardian, but only to do things that benefit the child.