Nicole Lapin

A custodial brokerage is a regular investment account held in your kid's name, managed by you until they hit the age of majority.

In most states, that's 18.

In others, it's 21.

So you might see these called UGMAS or UTMAS, which sounds like something you would name an evil stepmother in a Disney movie, but these counts are actually a fairy tale.

Unlike a 529, there are no rules about what that money can be used for.

College,

a car, a down payment, a business, a gap year in Bali or nothing and just let it keep growing.

The flexibility here is the point.

Here's the honest trade off, though.

Because these assets legally belong to the kid, they count more heavily against financial aid eligibility than a 529 does.

A student's assets reduce aid eligibility at a rate of 20% compared to the under 6% for parent owned assets.

So if financial aid is part of your plan,

Definitely factor that in.

So this account works best when it's paired with communication.

Open it early, let them watch it grow, and critically, talk to them about it.

Frame money as an important tool for their future, not arcade tokens.

That's actually why I opened this account for my daughter.

To show her that money can grow quietly in the background while you are out there living your best life.

That investing does not have to be a full-time job.

It can be a habit and a lucrative one.