What benefit will I get by putting money that I am saving for my child (college, wedding, whatever...) into a custodial account in my name and her name as the child, versus having it just in a savings in my name?
What is the benefit of opening a savings account in my child's name?
the main benefit is that the child can make up to 850 a year in interest without paying any tax on it. this is for any type of account. one little score for the working folk and a little less money for dear old uncle sam up till age 18, they dont even have to file it as long as total interest in child's name is less than 850 at 5%interest thats like 15000 in principal,tax free money u got to love that lol gl
Reply:The foreseeable benefit could be that the child would be legally entitled to that money when they became a legal adult if something happened to you between now and then. It may be held in a trust fund account until that time if that occured. In the meantime, otherwise, it would be gaining interest and they can access this when they are an adult as needed then.
IF it were just in your name and the unthinkable or unforeseen happened, then the state could disrupt what happens to it if you have no legal and binding will provision for them in this. Consider having a college fund set up as a trust fund instead as that will make it just with your name until that time comes. OR to have 2 seperate acounts, one with both names for their wedding expense, the other designated for college in JUST your name to ensure they don't take that out otherwise.
I would think tax laws are better for just as a child's trust fund.
Reply:If you are saving for college, keep the account in YOUR name.
There is a lot of good information on this site http://www.bankrate.com/brm/rate/college... And you can never start saving too early!
bleeding heart
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