A Trump child account is a custodial bank account set up by a parent or guardian for a minor, where the adult controls the money until the child reaches the age of majority

The term "Trump child account" does not refer to a specific product or account type created by Donald Trump or his organization. Instead, it is an informal name sometimes used to describe a custodial account — a legal structure where an adult holds and manages money on behalf of a child. The name appears to stem from references made during Trump's presidency or in financial media, but the account itself is a standard banking product offered by most banks and credit unions.

In a custodial account, the parent, guardian, or other adult (called the custodian) opens the account in the child's name but retains full control over deposits, withdrawals, and how the money is used. The child's Social Security number is used to open the account, and the money legally belongs to the child, but the custodian decides when and how it is spent until the child reaches the age of majority — typically 18 or 21, depending on your state and the type of account.

Key Takeaways

  • A custodial account is opened by an adult in a child's name and Social Security number, but the adult controls all transactions until the child reaches adulthood.
  • The money in the account belongs to the child, not the parent, and becomes the child's property to manage once they reach the age of majority in your state.
  • Custodial accounts can be opened under UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act) laws, which vary slightly by state.
  • Money deposited into a custodial account may have tax implications, and earnings above a certain threshold are taxed at the child's rate rather than the parent's rate.

How a custodial account is set up and who can open one

To open a custodial account, you visit a bank or credit union with your identification, the child's Social Security number, and proof of the child's identity (usually a birth certificate). The bank will ask you to choose between two legal frameworks: UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act). Most states recognize both, though UTMA is more common because it allows a wider range of assets to be transferred.

Any adult can open a custodial account for a child — a parent, grandparent, aunt, uncle, or other relative. You do not have to be the child's legal guardian, though you do need to be at least 18 years old. Some banks also allow you to name a successor custodian, who takes over if you die or become unable to manage the account.

The account itself functions like a regular savings or checking account. You can deposit money, earn interest, and withdraw funds as needed for the child's benefit. However, the bank will require you to show that withdrawals are for the child's benefit — education, medical care, housing, or other legitimate expenses — though enforcement of this rule varies by institution.

What happens when the child reaches adulthood

When the child reaches the age of majority in your state — 18 in most places, 21 in a few — the account automatically transfers to their control. The custodian's authority ends, and the child becomes the sole owner and decision-maker for the account. This transfer is automatic; no paperwork is required, though you should notify the bank in advance so they can update the account records.

The child then has full access to all the money in the account and can withdraw it, spend it, or leave it invested as they choose. There is no requirement that they use it for education, savings, or any particular purpose. This is one reason some parents hesitate to use custodial accounts — once the child reaches adulthood, the parent has no say in how the money is used.

Tax treatment of money in a custodial account

Money deposited into a custodial account is a gift from the custodian to the child. For federal tax purposes, gifts up to a certain amount per year ($18,000 in 2024, though this changes annually) are not taxable to either the giver or the receiver. If you deposit more than that in a single year, you may need to file a gift tax return, though you typically will not owe tax unless you exceed your lifetime gift tax exemption.

Interest, dividends, or other earnings generated by the account are taxed differently. The first portion of earnings — $1,300 in 2024 — is tax-free. The next portion up to $1,300 is taxed at the child's rate (usually lower than the parent's). Earnings above $2,600 are taxed at the parent's rate. This is called the kiddie tax rule, and it prevents parents from using custodial accounts purely as a tax shelter.

You will receive a 1099 form each year if the account generates taxable income, and you or the child will need to report that income on a tax return. The child's Social Security number is used for all tax reporting.

UTMA vs. UGMA: the legal difference

Both UTMA and UGMA are state laws that govern custodial accounts, and most states have adopted UTMA as the newer standard. The main difference is what types of assets can be transferred. UGMA accounts are limited to cash, securities (stocks and bonds), and insurance policies. UTMA accounts can also hold real estate, artwork, patents, and other property.

In practice, most custodial accounts opened at banks are UTMA accounts because they offer more flexibility. However, the difference rarely matters for a basic savings or checking account. Your bank will tell you which framework applies in your state and may offer only one option.

The age of majority also varies slightly by state. In most states it is 18, but in a few it is 21. Some states allow you to specify a different age when you open the account, though this is uncommon. Check with your bank or your state's laws if the age of majority matters for your situation.

Alternatives to custodial accounts

If you want to set aside money for a child but prefer to retain control longer, you have other options. A 529 education savings plan is a tax-advantaged account specifically for education expenses, and you retain control of the money even after the child turns 18. A trust is a legal document that lets you specify exactly how and when money is distributed to a child, and it can extend control well into adulthood. A regular savings account in your own name is also an option, though the money is legally yours and not the child's.

Each option has different tax treatment, legal implications, and costs. A custodial account is the simplest and least expensive to set up, which is why it remains popular for smaller amounts of money or when you want the child to have full control at adulthood.

Frequently Asked Questions

Can I take money out of a custodial account for my own use?

Legally, no. The money belongs to the child, and the custodian is required to use it for the child's benefit. Taking money for personal use can be considered theft or breach of fiduciary duty. However, enforcement is difficult unless someone challenges you, and many custodians do withdraw funds for their own purposes. This is a legal and ethical risk.

What happens if the custodian dies before the child reaches adulthood?

If you named a successor custodian when you opened the account, that person automatically takes over. If you did not, the account may be frozen until a court appoints a guardian or the child reaches adulthood. It is important to name a successor custodian and tell that person they have been named.

Does a custodial account affect financial aid for college?

Yes. Money in a custodial account is counted as the child's asset when calculating financial aid may be able to access, and it reduces aid more heavily than parent-owned savings. If you are planning to seek financial aid, a 529 plan or a trust may be better options because they are treated differently in aid calculations.

Can I change my mind and close a custodial account?

You can close the account, but you cannot reclaim the money — it belongs to the child. If the child is a minor, you can withdraw funds for the child's benefit, but not for yourself. Once the child reaches adulthood, only they can close the account.

Is there a limit to how much I can deposit into a custodial account?

There is no limit on deposits themselves, but gifts over $18,000 per year (2024) may trigger gift tax reporting. There is also no limit on how much can be in the account at any time. However, some banks set their own limits on account balances, so check with your institution.