The custodian maintains full control how the money is invested but it's important to note that all
assets in a custodial account BELONGS solely to the minor and shouldn't be withdrawn.
Under current law, assets owned by the child (including any assets
in a custodial account for the benefit of that child) count much more heavily than parental assets in determining financial aid awards.
Any
money in custodial accounts for which you are the custodian will be counted as part of your taxable estate if you are the legal guardian of the child and the child has not yet reached the age of trust termination.
Note that the FDIC insurance maximum applies to all of the funds that you have on deposit with the bank that fails, including funds that you have in deposit accounts with the bank other than your American Express Serve - related
funds in the Custodial Account.
These types of accounts, where financial gifts to a minor are held
in a custodial account until the child reaches adulthood, offer another option for saving for your child's education.
Assets held
in a custodial account become the property of the child as soon as the transfer to the UTMA account or UGMA account is completed, even though the minor can not control the custodial property until later (generally upon reaching the age of majority).
One of the frequent questions on our message board is how to handle a capital
loss in a custodial account under the Uniform Transfers to Minors Act (UTMA).
Custodial account
Money in a custodial account can be invested in many different securities, including CDs, stocks, bonds, and mutual funds, and the assets don't have to be used exclusively for college.
Even if funds in your American Express Serve Account (whether held by us or
held in a Custodial Account) are protected from claims by our creditors, in the unlikely event of our insolvency, it is possible that you will not have access to those funds while court or other legal proceedings are ongoing.
Once your child turns 19, or 24 if he or she is a full - time student, any income and capital gains on
assets in the custodial account are taxed at his or her rate.
Physical gold and silver do not have any counterparty risks as long as you do not buy them on margin and keep
them in a custodial account.
A child - owned 529 account (
in a custodial account) is also treated as an asset of the parent for Free Application for Federal Student Aid (FAFSA) purposes.
A capital loss from selling assets
in a custodial account can not be reported on the parents» tax return.
In the unlikely event of our insolvency, funds we place
in a Custodial Account should be protected from claims by our creditors; however, it is possible that funds that we hold before placement in a Custodial Account will not be protected from claims by our creditors.
The minor will owe taxes on any realized gains, but since they're taxed at the child's rates, there are usually major tax advantages to having the assets
in a custodial account.