• Custodial accounts most often arise under the Uniform Transfers to Minors Act (1983). All states have enacted either that act or its earlier version, the Uniform Gifts to Minors Act. Property can be set aside by a donor or transferred to a third party as custodian for the benefit of a minor, usu. as an irrevocable gift. This is a much simpler mechanism than a trust. The custodian has powers and fiduciary duties similar to those of a trustee, except that the custodian is not under a court’s supervision. The custodian must account for the property and turn it over to the beneficiary when he or she reaches majority. See UNIFORM TRANSFERS TO MINORS ACT.
custodial account
An account opened on behalf of someone else, such as one opened by a parent for a minor child.
