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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10103
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I am the only parent my child has. I opened a custodial account

Customer Question

I am the only parent my child has. I opened a custodial account and now need to close it for bills. How do I do so?
JA: Thanks. Can you give me any more details about your issue?
Customer: I own a business and need to put money into it.
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Submitted: 7 months ago.
Category: Tax
Expert:  Lane replied 7 months ago.
Hi,...The real world answer is that, as the custodian of the account, you go to the institution and withdraw the dollars. As custodianthey must do whatever you tell them with the money (invest it in a certain way,l send it to you, etc.)...From a legal perspective, however, a custodial account creates an irrevocable gift (This is why, when the child reaches the age of majority, it's their money and they then control the account)...This is the very reason that many USE a custodial account for estate planning purposes, to remove it from the estate (make it no longer owned BY the custodian, but rather owned by the child, with you AS custodian)....In most cases, the simplest solution is to withdraw the money and use it to pay bills to cover the cost of raising the child. There are no restrictions on which bills you pay — as long as the money is used to support the child whose name is ***** ***** account. Here’s what the law says:“A custodian may deliver or pay to the minor or expend for the minor's benefit so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order and without regard to (i) the duty or ability of the custodian personally or of any other person to support the minor, or (ii) any other income or property of the minor which may be applicable or available for that purpose.”...Said differently, if you’re having trouble paying the mortgage and the grocery bills, and your child is living in your house and eating your food, the law allows you to use the account to help pay those bills....Bot***** *****ne here, is that you (just to be safe) should document that the bills you pay are bills that relate to having that child to take care of.
Expert:  Lane replied 7 months ago.
By the way, here's an excellent article on the subject:http://fairmark.com/custacct/regret1.htm...I hope this has helped....Please let me know if you have any questions at all....If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the faces or stars on your screen, and then clicking “submit That’s the only way JustAnswer will credit us for the work here....Thank you!Lane……I hold a law degree (JD, Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security/Medicare, estate, corporate, both for-profit and non-profit, and tax advice, since 1986
Expert:  Lane replied 7 months ago.
Did you see my answer?