This is not investment advice. The information provided is for educational and informational purposes only and does not constitute a recommendation to buy or sell any financial product.
Joint and custodial accounts let you share investments with a spouse or invest on behalf of a child. These account types have specific legal and tax implications.
Joint accounts
A joint brokerage account is owned by two people, typically spouses. All major brokers offer joint accounts.
Joint Tenants with Right of Survivorship (JTWROS). The most common type. Both owners have equal rights to the account. When one owner dies, the assets pass directly to the surviving owner without going through probate. This is the default for married couples.
Tenants in Common (TIC). Each owner specifies their ownership percentage (e.g., 60/40). When one owner dies, their share passes to their estate or named beneficiary — not automatically to the other owner. Less common for brokerage accounts.
Community property. Available in community property states (California, Texas, etc.). Assets are considered equally owned by both spouses regardless of who funded the account.
Tax considerations for joint accounts
- Both owners report their share of dividends and capital gains on their tax returns.
- For married couples, this usually means a 50/50 split on a joint return.
- When one owner dies, the surviving owner receives a step-up in cost basis on the deceased owner's share, reducing future capital gains tax.
Custodial accounts (UTMA/UGMA)
A custodial account lets an adult (custodian) manage investments for a minor child (beneficiary). The assets belong to the child, not the custodian.
UGMA (Uniform Gifts to Minors Act). Allows financial assets: stocks, bonds, mutual funds, cash. UTMA (Uniform Transfers to Minors Act). Expands UGMA to include real estate and other property. Available in most states.
How custodial accounts work
- The custodian opens the account, makes contributions, and manages investments.
- Contributions are irrevocable gifts — once deposited, the money belongs to the child.
- When the child reaches the age of majority (18-25 depending on the state), control of the account transfers to them.
- There are no contribution limits, but contributions over $17,000 per year (2026) count against the gift tax exemption.
Tax treatment of custodial accounts
- The first $1,250 of unearned income (2026) is tax-free.
- The next $1,250 is taxed at the child's rate (usually 10%).
- Income above $2,500 is taxed at the parents' marginal rate ("kiddie tax").
- This structure provides tax advantages up to $2,500 of annual investment income per child.
Brokers that offer joint and custodial accounts
| Broker | Joint | UTMA/UGMA |
|---|---|---|
| Fidelity | Yes | Yes |
| Charles Schwab | Yes | Yes |
| Vanguard | Yes | Yes |
| Interactive Brokers | Yes | Yes |
| Robinhood | No | No |
| Webull | No | No |
| E*TRADE | Yes | Yes |
Common questions
Should I open a joint or custodial account? A joint account is for sharing assets with another adult (usually a spouse). A custodial account is for investing on behalf of a minor child, who will gain control at adulthood.
Can I take money out of a custodial account? Only for expenses that benefit the child. You cannot withdraw money for your own use. Once contributed, the assets belong to the child.
What happens to a joint account when one owner dies? In a JTWROS account, the assets pass automatically to the surviving owner. No probate is needed. In a TIC account, the deceased owner's share passes to their estate.
Where to start
Open a joint account at Fidelity or Schwab if you are sharing assets with a spouse. Open a custodial account at the same brokers if you are investing for a child. Read the account types hub for all options.