Question

a customer has recently funded a custodial account for his child and wants to make a favored uncle the custodian. how will the account be registered at the broker-dealer?

Answer 1

The custodial account will be registered with the broker-dealer under the child's name and the favored uncle as the custodian, following the format specified by UGMA or UTMA, depending on the state law.

Step-by-step explanation:

The account would be registered with the broker-dealer under the child's name with the favored uncle listed as the custodian. This type of account is typically a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account, depending on state laws. Registration would follow the format: "[Child's Name] by [Uncle's Name], custodian under the [state's] Uniform Gifts to Minors Act" or "[state's] Uniform Transfers to Minors Act", whichever is applicable.

The custodian has the legal authority to manage the account on behalf of the minor until the child reaches the age of majority defined by state law. It's important to note that once named, the custodian has fiduciary responsibilities and must act in the best interests of the minor concerning the account's assets.