Custodial Account
A financial account managed by an adult for a minor, with ownership transferring to the child at the age of majority.
What is Custodial Account?
A custodial account is a financial account established by an adult custodian — typically a parent or grandparent — for a minor beneficiary. The custodian manages the assets until the child reaches the age of majority (18 or 21 depending on the state), at which point full ownership automatically transfers to the child. UGMA and UTMA accounts are the two most common types in the US, and assets held in them count against financial aid eligibility.
Example
A parent opens a UTMA custodial account and contributes $200/month to invest in index funds for their child. At age 21, the child gains unrestricted control. The account's assets are taxed to the child, though amounts above the "kiddie tax" threshold are taxed at the parent's rate.