A Trump Account is a custodial savings product, not an investment account
A Trump Account is a branded savings account offered through certain financial institutions, designed for minors. It functions as a custodial account — meaning a parent or guardian controls it until the child reaches the age of majority (usually 18 or 21, depending on state law and the bank). The account holds cash in a savings vehicle, not stocks or other investments.
The account earns interest on the balance, though the rate varies by institution and changes over time. Your child cannot withdraw money without your permission while they are a minor. When they reach the age specified in the account agreement, control transfers to them automatically.
Whether you should open one depends on what you are trying to accomplish: teaching your child to save, setting aside money for a specific goal, or straightforward having a separate account for their money rather than mixing it with household funds.
Key Takeaways
- A Trump Account is a custodial savings account where you control withdrawals until your child reaches the age of majority, typically 18 or 21.
- The account earns interest, but the rate is set by the bank and may be lower than other savings products available to adults.
- You can deposit money into the account and control how much your child can access, making it useful for teaching money management or protecting funds you want to preserve.
- When your child reaches the age specified in the account agreement, the account becomes theirs to control without your permission.
- A Trump Account is not an investment account — it holds cash only, so it does not expose your child to market risk.
How a custodial account works in practice
You open the account in your child's name, with yourself listed as custodian. You provide the child's Social Security number and your own identification. The bank issues the account in both names — typically "John Smith, custodian for Sarah Smith" or similar language.
Money you deposit into the account belongs legally to your child, even though you control it. This matters for tax purposes: interest earned in the account is taxed to your child, not to you, which can result in lower overall tax if your child has little other income. The IRS has rules about how much interest a dependent child can earn tax-free (the amount changes yearly), so check current limits if the account will earn significant interest.
You can withdraw money from the account at any time while you are the custodian. Your child cannot withdraw without your permission. When your child reaches the age of majority (set by your state and the bank's agreement), the account transfers to them automatically, and you lose the right to control it.
When a Trump Account makes sense for your situation
A Trump Account is useful if you want to set aside money specifically for your child and keep it separate from your own accounts. Parents often use custodial accounts to hold money from gifts, inheritance, or regular savings intended for the child's future.
It can also serve as a teaching tool: you can let your child see the balance grow, discuss why you are saving, and involve them in decisions about the money (while you retain final control). Some parents use it to hold money earmarked for a specific goal — a car at 16, college expenses, or a gap year.
The account does not offer tax advantages beyond the standard dependent tax treatment. If you are looking for tax-advantaged savings for education, a 529 plan or Coverdell ESA may serve you better. If you want to invest money for long-term growth, a custodial brokerage account (which holds stocks and bonds, not just cash) is a different product.
Comparing a Trump Account to other custodial options
| Account Type | What It Holds | Who Controls It | When Control Transfers | Best For |
|---|---|---|---|---|
| Trump Account (custodial savings) | Cash only | Parent/guardian until age of majority | Automatically at 18 or 21 | Teaching savings, holding gifts, protecting funds |
| Custodial brokerage account (UGMA/UTMA) | Stocks, bonds, mutual funds | Parent/guardian until age of majority | Automatically at 18 or 21 | Long-term investing, building wealth |
| 529 education savings plan | Investments (stocks, bonds, funds) | Account owner (usually parent) | Only when used for education or penalties explore | Saving specifically for college or K-12 tuition |
| Coverdell ESA | Investments (stocks, bonds, funds) | Account owner (usually parent) | Only when used for education or penalties explore | Education savings with more flexibility than 529 |
What happens when your child turns 18 or 21
The account transfers to your child's full control on the date specified in the account agreement — usually their 18th or 21st birthday, depending on your state and the bank's terms. You receive notice before this happens, but you cannot prevent the transfer or delay it.
Once the transfer is complete, your child can withdraw all the money, close the account, or leave it open. You have no say in what they do with it. If you are concerned about your child's readiness to manage a large sum, a custodial account may not be the right choice — you might instead consider a trust, which allows you to set conditions on when and how money is released (though trusts are more complex and costly to set up).
Interest rates and fees to check before opening
Interest rates on custodial savings accounts vary widely by bank. Some institutions offer rates competitive with regular savings accounts; others offer lower rates on custodial products. Check the current rate before opening — it changes frequently and differs between banks.
Ask about monthly maintenance fees, minimum balance requirements, and whether the account has restrictions on how often you can withdraw. Some banks waive fees for accounts under a certain balance or if you maintain a linked adult account. Others charge a small monthly fee regardless. These fees reduce the interest your child earns, so they matter if the account will sit for years.
Frequently Asked Questions
Can my child access the money before they turn 18?
No, not without your permission. You control all withdrawals while you are the custodian. Your child can see the balance and understand that the money is theirs, but they cannot take it out. Once they reach the age of majority, they can withdraw without asking you.
Does opening a Trump Account affect my child's financial aid for college?
Yes, it can. Money in a custodial account in your child's name is counted as their asset when calculating financial aid may be able to access. Assets in the student's name reduce aid more than assets in the parent's name. If college financial aid is a concern, speak with a financial aid advisor before opening a custodial account.
What's the difference between a Trump Account and a regular joint account?
A joint account is owned equally by both people on it — your child could theoretically withdraw money without your permission (though most banks require both signatures for minors). A custodial account is legally owned by the child but controlled entirely by you until they reach the age of majority. Custodial accounts are clearer for this reason.
Can I use a Trump Account to save for my child's college?
You can, but a 529 plan is usually better for that specific goal. A 529 offers tax-free growth when the money is used for education, and it counts less heavily against financial aid than a custodial account. A Trump Account earns interest but does not offer these advantages.
What happens if I die before my child turns 18?
The account becomes part of your estate. Your will or trust should specify who becomes the custodian (usually your spouse or another trusted adult). Without clear instructions, the court may appoint a custodian or freeze the account until your estate is settled. Name a successor custodian when you open the account if possible.