You likely want a custodial account. A custodial account is a common way for adults to start an investment account for a child, whether their own child, a grandchild or another minor.
Who can open a custodial account for a minor?
Generally, the account is opened by a parent for their child. However, grandparents, other family members, and friends can also open a custodial account for a minor. There are two main types of custodial accounts: the Uniform Gift to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA).
Who can make contributions to a custodial account?
Anyone can make contributions to a custodial account, but only the custodian can make investment decisions or conduct transactions. The custodian has a fiduciary duty to manage the assets held in a custodial account in the best interest of the child. There are no income or contribution limitations for this type of account.
