| Savings & Investments Custodial Accounts |
Custodial Accounts
Substantial tax benefits may be realized by using a Custodial Savings Account to make gifts of money to minor children. Under the Uniform Transfers to Minors Act, any adult family member can be named custodian. However, either the custodian or the minor must be a member of USAlliance Federal Credit Union.
The establishment of a Custodial Savings Account represents an irrevocable
gift of money to the child. Thus, when gifts of money from you or other adults
are deposited into the Custodial Account, they become the absolute property of
the minor. Dividends earned on these savings are then taxable to the minor,
not the custodian.
By law, the custodian is responsible for all account transactions and only the custodian can withdraw money from the account. This money must be used for the benefit of the minor and for no other purpose. When the minor reaches age 21 (or age 18 if so specified when the account is opened), the account balance must be paid directly to him or her. Custodial Account balances are combined with other account balances of the minor member and insured separately to $100,000 by the National Credit Union Administration, a U.S. Government Agency.
The establishment of a Custodial Savings Account may have important legal and tax limitations, including income, gift, and estate tax consequences. We recommend that you consult your personal attorney or tax advisor before opening a Custodial Savings Account.
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