Does anyone know what a custodial savings account is ? I am looking into opening a savings account for my kids 10 and 7 to teach them to save so I was wondering if it is best to go with a regular or custodial savings account.

thanks

You could go with a regular savings account, a custodial account means that the custodian, you, would be the only one that would be able to do anything on the account, but it would be in the name of the child - once the child turned 18 they could then do what they wanted on the account

If my memory is correct, a custodial accout is money the belongs to your child and you are investing for that child (even tho it's your money you set aside for them). The only advantage is that you do not pay taxes on the interest income and if you do not have a will the money would be turned over to the child at legal age (varies from state to state) without going thru probate. Big Disavantage- Should you decide to spend this money, even if it's for the child's education, care, etc, legally the child can hold you responsible to repay the money to them.

There are other options for your children, if it's a large sum of money get legal advice. We all want our children to grow up to be responsible adults, but lets face it, not all do. You would not want a child that has some sort of problem, be it drugs, gambling, etc. to be handed thousands of dollars at 18/21 years old with no strings attached. Just something to think about.

I have costodial accounts for my kids for the same reason you do, to make them save, birthday $ and such goes into that account. When the account gets to $500 I "make them" buy a savings bond. It goes in their name and they can get the money later. The costodian should be the parent that can do the banking with them. Keeping the account below $500 makes me feel better that it isn't really enough money to do anything really stupid.

I also have a brockrage account for the kids that they have nothing to do with. it will be theirs when they reach 21, if I ever tell them that it belongs to them. that is the real money for the future.
-L