Best Custodial Accounts of 2025
M1 Custodial Account
Best Custodial Account for Portfolio Management
M1 Custodial Account
Fees
$0 or $3 per month*
*$3 fee for clients who don’t have an M1 Personal Loan or assets over $10,000 on day one of billing.
$0 or $3 per month*
*$3 fee for clients who don’t have an M1 Personal Loan or assets over $10,000 on day one of billing.
Editor’s Take
M1 custodial accounts are designed to be easy to manage. To open a custodial account with M1, you do need to have an individual or joint brokerage account. Your first deposit into the custodial account must be at least $100, but after that, you can set up minimum deposits as low as $10.
The account remains under the custodian’s name until the beneficiary comes of age. Only the custodian can approve trading, withdrawals and deposits. Separate login information can be shared with your minor for viewing. When it comes time to transfer the account, the beneficiary simply confirms their identity, submits a transfer request, and the funds either transfer to a new M1 account or are dispersed as cash.
Pros & Cons
- Auto-investing feature
- Full customization of investment portfolio
- Easy transfer process when the beneficiary reaches the age of majority
- Must have an open individual or joint brokerage account to open a custodial account
- $3 monthly platform fee on accounts less than $10,000
Acorns Early Invest
Best Custodial Account for Multiple Children
Acorns Early Invest
Fees
$3 to $12 per month*
*$12 per month is required for the Gold subscription level
$3 to $12 per month*
*$12 per month is required for the Gold subscription level
Editor’s Take
Acorns Early Invest is all about ease of use. In fact, it’s an added perk if you are enrolled in the Gold subscription for $12 per month. Investments are automatically invested into Acorn Early’s Aggressive Portfolio, an expert-built exchange-traded funds (ETFs) portfolio containing stocks and bonds, or you can customize your own. Instead of setting up separate automatic deposits, you can choose to have a portion of your paycheck automatically go into the account.
One great perk of subscribing to the highest tier of Acorns Early is the 1% matching on custodial accounts. The $12 monthly fee also covers all custodial accounts you choose to open, eliminating the need to pay for each child’s account individually. If you have multiple children, and you plan to open custodial accounts for this platform, it might be a good fit.
Pros & Cons
- Bonus promotions and 1% investment matching for Gold subscribers
- Low $5 minimum deposit
- Free custodial accounts for additional children
- Higher than average monthly fees
- Subscription required
- The most expensive subscription tier is required for additional benefits
UNest Custodial Account
Best Custodial Account for Beginners
UNest Custodial Account
Editor’s Take
Unlike other providers that offer different types of investment accounts, UNest focuses solely on custodial accounts. This can be a pro or a con based on your needs, but for families who have their investment accounts built elsewhere and don’t want to move to a new provider, UNest is the answer.
While UNest does not currently allow custom investment portfolios, it does have premade portfolios that range from conservative to moderate and aggressive. If you choose, UNest advisors can recommend the right one for you based on your child’s age and risk tolerance.
For families with more than one child, UNest makes it easy to create multiple accounts, with no extra cost. Once you set a monthly contribution limit (a monthly minimum of $25 for each account), you can let auto-investing do the rest.
Pros & Cons
- Premade investment portfolios for easy account setup
- Can add unlimited children to your account at no extra cost
- Socially responsible investments (SRI) options
- No custom investment options
- Subscription-based platform that is more expensive than competitors
- Gifting is currently unavailable
Fidelity Custodial Account
Fidelity Custodial Account
Editor’s Take
A Fidelity custodial account requires no minimum opening deposit and charges no recurring maintenance fees. You can pick and choose which types of investments you make, giving you complete control over your child’s custodial account. Custodians have access to the full range of investment options available in a Fidelity taxable brokerage account, including stocks, bonds, mutual funds, options, certificates of deposits and fractional shares. And of course, custodians have full access to choose the investments. The beneficiary can’t control the investments until the account is transferred to them.
Transferring money into the account is as easy as setting up a recurring monthly contribution. There are no minimums, so you can contribute as much or as little as you are able.
Custodians can also set up a separate Fidelity Youth Account for teens ages 13 to 17, a teen-owned brokerage account. The account allows teens to view the account, watch it grow and learn about investing. When it’s time to transfer the account to the beneficiary, Fidelity simplifies the process with a notification and step-by-step instructions.
Pros & Cons
- Customizable investment portfolios for hands-on investing
- Range of mutual funds and other investments to choose from
- Auto-investing and recurring deposits are available
- Customizable options require lots of research
- Some investment funds have associated fees
Schwab One Custodial Account
Best Custodial Account for Customer Service
Schwab One Custodial Account
Editor’s Take
With no minimum account deposit, maintenance fees or account opening fees, you can open a custodial account with Charles Schwab and start investing in your child’s future immediately. Further, Charles Schwab is well known for its 24/7 customer support service, where you can talk to a knowledgeable account expert to answer any questions you may have.
Charles Schwab charges no commissions on U.S.-listed stocks, index funds and ETFs. But if you choose other types of investments, like over-the-counter trades or options, you will be subject to commission fees. If using Schwab Intelligent Portfolios, there’s a minimum investment requirement of $5,000.
Pros & Cons
- Complete control over which investments you make
- Stocks from the S&P 500 available for as little as $5 as a fraction share
- 24/7 customer service
- $0 commission does not apply to OTC equities, transaction-fee mutual funds, options, futures, fixed-income investments or forex trades
- A$5,000 minimum if you select Schwab Intelligent Portfolios to manage the assets
Vanguard Custodial Account
Best Custodial Account for Investment Choices
Vanguard Custodial Account
Fees
$25 annual account service fee*
*Unless waived with e-delivery or asset minimums
$25 annual account service fee*
*Unless waived with e-delivery or asset minimums
Editor’s Take
If you prefer to take control of your investments, a Vanguard custodial account is the ideal choice, especially if you plan to take a hands-on approach. There are many types of investments to choose from, as Vanguard custodial accounts benefit from their lineup of investment options, including Vanguard mutual funds, stocks, bonds, non-Vanguard mutual funds and ETFs.
Although there are no minimum amounts required to open a custodial account with Vanguard, they do charge a $25 annual account service fee. However, this fee is easily waived if you opt for email delivery of account statements and other notices.
Anyone who already has a brokerage account or another account with Vanguard will find it easy to transfer funds from one account to another. But if you aren’t a Vanguard customer, you can just as easily transfer money from your bank account.
Pros & Cons
- No advisory or transfer fees for self-directed investors
- Library of investments to choose from
- Custom scheduling to electronically move money into custodial accounts
- Advisor fees apply
- $25 annual account service fee unless you get it waived
Methodology
To build our list, Forbes Advisor reviewed more than 30 firms that offer online custodial accounts. Many of them are online brokers, investing apps or mobile apps that support a wide range of account options.
Our curated selection focuses on firms that offer tailored custodial account services, aiming to support new investors with additional customer service and educational resources.
UTMA vs. UGMA Accounts: What’s the Difference?
Not everyone goes to college, which is why some parents have forgone the 529 savings account in favor of a more flexible Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) account.
Both UGMA and UTMA accounts are used to save money for your child’s future, and the main difference between the two is the type of assets they accept. UGMA accounts are limited to financial assets, whereas a UTMA can hold all sorts of assets, including real estate, intellectual property and more.
Another difference between UTMA and UGMA accounts is the age at which the minor gains control of the account. In most states, minors can assume control of a UGMA account at the age of 18, while they must wait until age 21 (or up to 25 depending on your state) to gain control of a UTMA account. But even then, it depends on your state.
“The primary concern with custodial accounts is that the custodian loses control over the assets once the child reaches the age of majority in their respective state,” says Derek Jones, a charter financial analyst and financial advisor at Scratch Capital. Turning over a large sum of money to a young adult can be a daunting thought for a parent/or guardian. This is why “UTMA accounts are preferable if the custodian would like to maintain control over the assets for a longer period of time,” Jones says.
Are Custodial Accounts Taxable?
Custodial accounts are taxable investment accounts, subject to yearly taxes. If a custodial account is above the exemption threshold, whether that be from dividend payments, interest or capital gains, the beneficiary—not the parent or custodian—must pay taxes on it. However, this can have its benefits.
“A major benefit of custodial accounts is the flexibility the kids then have to pay taxes on it,” says R.J. Weiss, certified financial planner and CEO of The Ways to Wealth. For example, if a child’s taxable income stays within the 0% long-term capital gains tax bracket after they turn 18, they could owe no federal tax on the gains. “Therefore, a student with little to no income could create their own form of tax-free growth simply by shifting the realization of gains into low-income years,” Weiss says.
For 2026, the first $1,350 in investment income is exempt from federal taxes. The next $1,350 in income is taxed at the child’s tax rate, commonly known as the “kiddie tax” rate. After that, all investment income above $2,700 is taxed at the parent’s marginal income tax rate.
Anyone, including parents, grandparents, relatives or friends, can contribute to a custodial account, and contributions to custodial accounts are unlimited. However, the gift tax may be applicable for contributions above a certain threshold.
Frequently Asked Questions (FAQs)
Both UGMA and UTMA serve the same purpose of giving your child a more flexible option with their savings account once they reach adulthood, but UGMA’s are best if you plan to stick with financial assets. If you plan to add other types of assets, like real estate and intellectual property, a UTMA is a more flexible option.
Is a 529 plan or a custodial account a better choice?
It’s up to individual choices. Custodial accounts are best for flexibility but are subject to yearly capital gain tax and negatively impact the Free Application for Federal Student Aid (FAFSA) for student loan applications. The 529s are tax-beneficial and are favorable toward college financial aid applications but can only be used toward education expenses.
Who pays taxes on a custodial account?
The child named beneficiary on the account is the one who pays its taxes. Custodians are responsible for filing the annual tax return, and income over a specific level (known as the “kiddie tax” rule) is taxed.
At what age does the child get control of the custodial account?
The age of majority for custodial accounts is typically 18 to 21, but it depends on the type of custodial account and where you live.
Can the money in a custodial account be used for anything?
Once a custodial account is transferred to the beneficiary, that money can be used for anything relating to the child’s benefit. This definition is vague and can include anything from clothing to a new apartment, if the beneficiary benefits from the purchase. In essence, it means the funds can be used for any purpose.