What accounts can I open for a minor?

Thank you for your interest in opening an account for a minor. We support two account types that can be held for minors: Trusts and Custodial accounts.

Trust Accounts

A Trust is a legally binding relationship where assets can be held for the benefit of another third party. The terms of the Trust can be set by the creator of the Trust with freedom; however, setting up and managing a Trust can be complex and expensive. We recommend consulting a trust attorney if you are new to trusts and the associated implications. If you already have a trust set up, you can open a Wealthsimple account in the name of your trust. Get Started

Custodial accounts

Custodial accounts (UTMA and UGMA) are types of trusts that are specifically designed to hold and manage assets for a minor until they reach the age of majority. These account types are easier to set up and cheaper to manage because the terms of custodial accounts are already predetermined. Some of the notable terms are as follows:

• The first $1,050 of income in Custodial accounts are tax-free and then an equal portion is taxed at the child's preferred tax rate. Income above $2,100 is taxed at the parent's rate.
• Deposits into custodial accounts are irrevocable. The funds are turned over to the child once they turn the age of majority in their state, and can only be spent for the benefit the child in the meanwhile. Donors are also prohibited from withdrawing money back from the account.

You can choose to make your Custodial account a Uniform Gifts to Minors (UGMA) or a Uniform Transfers to Minors Acts (UTMA). The main difference between UTMAs and UGMAs is that UTMAs can hold a wider array of assets including real estate while UGMAs can only hold cash, stocks, and other securities. The difference doesn't make a difference in how a Wealthsimple account is invested but may be important if you plan on contributing or transferring assets to the custodial accounts outside Wealthsimple. Get Started