14.2.10.2. Custodial Accounts
Custodial accounts are accounts administered by an independent person (custodian) for the benefit of an individual accountholder (beneficiary). When custodians have third-party trading authorization allowing them to make trades in the accounts, they too have a fiduciary responsibility. Custodial accounts include employee retirement accounts and accounts belonging to a minor.
Most states have enacted a Uniform Transfers to Minors Act, which supplements or replaces their previous Uniform Gifts to Minors Act. An UGMA or UTMA account is a custodial account set up by a parent or other donor to save money for a minor for future needs of many sorts. They can be used to provide money for college, although other accounts are much more useful for that purpose (see Chapter Sixteen).
An UGMA/UTMA account is a custodial account that is opened by an adult who manages it for a minor. An alternative to this type of account for a minor is a trust, but an UGMA/UTMA account is simpler and less expensive to set up. There can be only one custodian and one minor for each account. The minor and custodian do not need to be related, but the custodian must be an adult and must be