Advanced English Dialogue for Business – Custodial account

Listen to a Business English Dialogue About Custodial account

Emery: Hey Kenneth, have you ever heard of something called a custodial account in finance?

Kenneth: No, I haven’t. What is it?

Emery: A custodial account is a type of account where a custodian holds and manages assets on behalf of a beneficiary, typically a minor.

Kenneth: Oh, I see. So, it’s like a way for parents or guardians to invest on behalf of their children?

Emery: Exactly! The custodian has a fiduciary duty to manage the assets in the best interest of the beneficiary until they reach the age of majority.

Kenneth: That sounds important. Are there any restrictions on what assets can be held in a custodial account?

Emery: Custodial accounts can hold various types of assets, including cash, stocks, bonds, mutual funds, and other securities.

Kenneth: I see. How does someone establish a custodial account?

Emery: Typically, a parent or guardian opens the account on behalf of the minor and acts as the custodian until the minor reaches the age of majority.

Kenneth: Got it. What happens to the custodial account when the beneficiary reaches the age of majority?

Emery: Once the beneficiary reaches the age of majority, they gain control of the account and can make decisions about how to manage the assets.

Kenneth: Thanks for explaining, Emery. Custodial accounts seem like a useful tool for saving and investing for the future.

Emery: No problem, Kenneth. It’s a great way to start building wealth for children and teach them about financial responsibility.