Custodial Account Application
Regular taxable brokerage accounts are accessible to everyone. Anyone can save in a typical brokerage account, including minors.
Although most brokerage accounts opened at Schwab use the same application, a Schwab One Account Application for Personal Accounts, depending on who and how many people own the assets, there are different ways to fill out the paperwork.
This prefilled paperwork is intended for a guardian wanting to open a minor-owned brokerage account, called a custodial account.
Important language to understand: The minor is the primary account holder. The guardian/parent/adult on the account is called the custodian. Until the age of termination, the custodian is the only one who will be permitted to make decisions on the account even though the assets are owned by the minor. The custodian is held to the fiduciary standard, meaning they are legally required to act in the minor’s best interests.
In Section 2, we have selected “Custodial” as this is the minor-owned account type. For each custodial account, you must select under which state law you are opening the account. By default, most people pick where they reside.
You also need to pick at which age you would like the assets to revert to being owned outright by the minor. Most states have age 21 as the maximum age of termination allowed. You can look up your state’s age of majority rules here . By default, we recommend picking age 21.
After that section, most of the form is simply filling out your personal information for the account open. First, you enter the minor’s information. Then, you enter the custodian’s information. At the end, only the custodian needs to sign.
At the very end of this form in Section 12, you can nominate a successor custodian who will serve in the event of the custodian’s incapacity, death, resignation, or removal as custodian. You should nominate someone other than the guardian/parent/adult who you selected as the custodian. For example, if mom is the custodian, you could nominate dad as the successor custodian.
While this section is not required to open a custodial account, we recommend completing it to take advantage of the opportunity to engage in smart estate planning for this account. The signature for this appointment must be witnessed. The witness can be almost anyone, but, as the note says, “The witness may NOT be designated as the successor custodian.”