CUSTODIAL ACCOUNT Meaning and
Definition
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A custodial account refers to a financial account established for the benefit of a minor or an individual who is unable to manage their own finances. It acts as a legal framework or protective structure where a designated adult, known as the custodian, manages and controls the funds or assets within the account on behalf of the beneficiary. The purpose of a custodial account is to provide a means for the custodian to hold and invest assets for the beneficiary's benefit, typically until the individual reaches a predetermined age or milestone.
Custodial accounts are typically established under specific legal guidelines and regulations, which vary depending on the jurisdiction. The custodian is obligated to act in the best interests of the beneficiary and assume the fiduciary responsibility of safeguarding the assets. They have the authority to make investment decisions and manage the account's assets, including buying or selling securities, real estate, or other designated investments.
Custodial accounts are often used to accumulate wealth for a child's future educational expenses, such as funding their college tuition or providing financial support as they transition into adulthood. The assets held within a custodial account are considered the property of the beneficiary, even though the custodian has control over them until the specified age or event. This type of account provides a way for individuals to establish financial security and meet long-term financial goals while ensuring responsible management by an appointed adult custodian.
Common Misspellings for CUSTODIAL ACCOUNT
- xustodial account
- vustodial account
- fustodial account
- dustodial account
- cystodial account
- chstodial account
- cjstodial account
- cistodial account
- c8stodial account
- c7stodial account
- cuatodial account
- cuztodial account
- cuxtodial account
- cudtodial account
- cuetodial account
- cuwtodial account
- cusrodial account
- cusfodial account
- cusgodial account
Etymology of CUSTODIAL ACCOUNT
The word "custodial" is derived from the Latin word "custodia" which means "guardianship" or "care". It is formed from the root word "custos" meaning "guard" or "keeper". In finance and banking, a "custodial account" refers to an account that is held and managed by a custodian, who is responsible for safekeeping and managing the assets on behalf of a beneficiary.
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