Go Back

Updated on
March 16, 2024

Custodial Account

Written by: 

A financial account that is held and managed by a custodian on behalf of a minor or individual who is not managing their account. The custodian has legal responsibility for managing the assets in the account and making investment decisions on behalf of the beneficiary.

Custodian accounts are commonly used to hold securities, such as stocks, bonds, and mutual funds, as well as other types of investments, such as real estate, precious metals, and cryptocurrency.

There are several types of custodian accounts, including individual retirement accounts (IRAs), 401(k) plans, and guardianship accounts for minors or incapacitated individuals.

Custodian accounts offer a level of convenience, as the custodian handles many of the administrative tasks associated with managing the assets, such as executing trades, distributing dividends and interest payments, and preparing tax documents.

However, it's important for investors to be aware that custodian accounts do come with some limitations. For example, the custodian may have the authority to make certain decisions about the assets in the account, such as selecting investments or rebalancing the portfolio. Investors should carefully review the terms of the custodial agreement to understand their rights and responsibilities, as well as any fees that may be associated with the account.

Overall, custodian accounts can be a useful tool for investors who want to ensure that their assets are managed and safeguarded by a professional. It's important to carefully review the terms of the custodial agreement and understand the limitations and fees associated with the account before making a decision.

Ready to start investing?

Sign up for Landa and start investing in real estate.

Get Started