INVESTMENT OPPORTUNITIES

CUSTODIAL ACCOUNTS

The most common use of custodial accounts is in situations where you have a genuine desire to make a financial gift to a child. Perhaps you want your child or niece or nephew to have a taste of ownership in stocks, or simply to see the benefit of watching savings grow. Often, parents and grandparents open an account in a minor’s name to help them save for future uses like college, a new car, etc. Custodial accounts can be funded by lump sum payments or systematic withdrawals* from checking, savings and money market accounts.

The bottom line is, if the dollar amount is relatively modest, a custodial account may be the best vehicle for that type of gift.

Here's a quick overview of custodial accounts established under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA):

A transfer to a child under UTMA or UGMA requires the involvement of a custodian. This is an adult who will manage the property until the child reaches the age when control passes to the child. The person transferring property to the child can act as custodian or name another adult to act in that capacity.

The custodian manages the property, making decisions concerning buying and selling, reinvesting earnings and so forth. The custodian may also take money from the account to spend for the benefit of the child.

Even though the child will not have control of the property until later, the child is the owner as soon as property is transferred to the account. This fact has important consequences:

A gift is legally complete when cash or other property is transferred to a custodial account, not when the account terminates. You're not allowed to change your mind and take the property back.

Income generated by assets in the account is the child's income.

Termination
The account terminates when the child reaches a specified age. The age depends on your state's law, and may depend on the type of transfer. When the account terminates, the custodian transfers the property to the child, who can use it in any way he or she chooses.

Fortunately, your CFS* Financial Advisor at CommunityAmerica Credit Union, licensed through our broker dealer CUSO Financial Service, L.P., is here to help answer your questions, and make sure you're aware of the options available to you.

The most important step is to start planning today by contacting a CFS* Financial Advisor. Our CFS* Financial Advisors are dedicated career professionals carefully selected and trained to serve credit union members.

Remember, we want you to have confidence in your CFS* Financial Advisor to act in your best interest –– which means you can expect our advice to be objective, fair and honest.

We invite you to call your CFS* Financial Advisor today, so we can begin working with you to help develop the right retirement plan for you.

* Investments and investment advisory services offered through CUSO Financial Services, L.P. (CFS), an independent broker-dealer and SEC Registered Investment Advisor are Not NCUA/NCUSIF insured, are Not credit union guaranteed and May lose value. CommunityAmerica Credit Union is affiliated with CFS. Financial Advisors are employees of CommunityAmerica Credit Union and registered through CFS. (Member FINRA/SIPC)