Publication

Article

Physician's Money Digest
August15 2003
Volume 10
Issue 15

CUSTODIAL ACCOUNTS?

Author(s):

As newer ways to finance Junior'scollege education have emerged, custodialaccounts have fallen out offavor. Two disadvantages weighed onparents' decisions. First, the money isin Junior's name, which could meana smaller financial aid package.Second, the money belongs to Juniorwhen he attains legal age (18 or 21,depending on the state you live in),and he can do whatever he wantswith it. Now, capital gains tax breaksfor low-bracket taxpayers may reviveinterest in custodial accounts. Thenew tax law allows those in the 10%and 15% brackets, which is wheremost college-age children are, to sellwinning stocks at a 5% capital gainstax rate between now and 2007, andat a 0% rate in 2008. That makescustodial accounts a bit more competitivewith 529 and Coverdellplans, where withdrawals are tax-freewhen used for college expenses. Formore information, visit www.fairmark.com/custacct.

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