Do you hold any accounts as legal custodian for a minor, or alternatively, do you own a 529 account with a minor designated as the beneficiary? These are common strategies available for people who desire to provide for their minor children, grandchildren, or other loved ones. The rules and options surrounding these types of accounts differ dramatically depending upon the type of account in question.
For 529 accounts, which are required to specifically to be used for qualified educational expenses, it’s possible for you to own the account, the minor’s parent to own the account, or for the student to own the account, if he or she is over age 18. If you own the account yourself and designate a minor beneficiary, you retain control over the assets within the account and you can change the beneficiary at any time.
In a custodial account arrangement, the custodian holds the funds on behalf of a minor until that minor reaches a designated age between 18 and 25. However, the custodian is not actually the owner of the account assets—the minor is. The minor just can’t control the funds themselves until the designated age.
If you are responsible for any of these types of accounts, you should designate a successor custodian or successor account owner. Ideally, you should complete a form and submit it directly to the company where the account is held. For custodial accounts, it’s also a good idea to include a designation of successor custodian in your Will or Trust. We can help! Please give us a call if you have any questions at all. If you pass away unexpectedly, your family will thank you for taking the time to ensure a smooth transition of these minor accounts.