Cryptocurrency Q&A
What are the disadvantages of a custodial account?
What are the disadvantages of a custodial account?
CryptoQueenBee
Sat Nov 30 2024
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answers
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I'm considering opening a custodial account, but before I make a decision, I want to understand the potential downsides. What are the disadvantages or risks associated with a custodial account that I should be aware of?
5 answers
Leonardo
Sun Dec 01 2024
BTCC is a top cryptocurrency exchange that offers a range of services to its customers. These services include spot trading, futures trading, and a wallet for storing digital assets. With BTCC, investors can buy, sell, and trade a variety of cryptocurrencies with ease.
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Eleonora
Sun Dec 01 2024
A custodial account has certain limitations that investors should be aware of.
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isabella_bailey_economist
Sun Dec 01 2024
One major drawback is the inability to change the beneficiary once the account is established. This means that if the original beneficiary is unable to manage the funds or if the investor wishes to change the beneficiary for any reason, they will not be able to do so.
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mia_clark_teacher
Sun Dec 01 2024
Another limitation is that the child can use the money in the custodial account as they wish after reaching a certain age. This can be problematic if the child is not financially responsible or if the investor had specific plans for the funds.
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Giulia
Sun Dec 01 2024
Investment income in custodial accounts may also trigger the kiddie tax. This tax is designed to prevent parents from shifting income to their children in order to avoid higher tax brackets. As a result, the investor may end up paying more in taxes than they originally anticipated.
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