Robinhood does not offer custodial accounts

Robinhood does not provide custodial accounts, which are investment accounts set up by an adult to manage money on behalf of a minor. If you are looking to invest for a child under 18, you cannot open a custodial account directly through Robinhood's platform.

This is a significant limitation if you want to teach a young person about investing or set aside money for their future through stock and ETF purchases. You will need to use a different brokerage firm that does offer custodial accounts, such as Fidelity, Charles Schwab, E-Trade, or Vanguard.

Key Takeaways

  • Robinhood does not support custodial accounts, so you cannot open an account in a child's name with yourself as the custodian.
  • A custodial account is a legal structure that lets an adult manage investments for a minor and transfer them to the child at age of majority (usually 18 or 21).
  • Other brokerages including Fidelity, Charles Schwab, E-Trade, and Vanguard all offer custodial accounts with varying fees and investment options.
  • If your child is 18 or older, they can open their own Robinhood account without a custodian, though Robinhood still has account restrictions for users under 21.

What a custodial account does

A custodial account is a brokerage account registered in a minor's name but controlled by an adult — usually a parent, grandparent, or guardian. The adult (called the custodian) makes all investment decisions, buys and sells securities, and manages the account until the child reaches the age of majority, which is 18 in most states or 21 in a few.

When the child turns that age, the account transfers to them automatically, and they gain full control. This structure is governed by either the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA), depending on your state. The key difference is that UTMA accounts can hold real estate and other property types, while UGMA accounts are limited to cash, securities, and insurance.

Custodial accounts are commonly used to save for a child's education, teach investing habits, or set aside money from gifts or inheritance. The account earns income in the child's name, which can have tax advantages in some situations because the child's tax rate may be lower than the parent's.

Why Robinhood does not offer them

Robinhood's business model is built around simplicity and low cost, which means the platform does not support all account types that traditional brokerages do. Custodial accounts require additional legal documentation, compliance procedures, and ongoing account management that Robinhood has chosen not to implement.

Robinhood also restricts certain features for younger users. Even if you open a standard account for someone under 21, Robinhood limits options trading and margin trading on that account. Adding custodial account support would require Robinhood to build out more complex age-verification and account-transfer systems, which does not align with their streamlined platform design.

Brokerages that do offer custodial accounts

If you want to open a custodial account, several major brokerages support them. Fidelity offers custodial accounts with no account minimums and access to stocks, ETFs, mutual funds, and bonds. Charles Schwab also provides custodial accounts with similar investment options and no minimum balance requirement.

E-Trade and Vanguard both support custodial accounts as well. Vanguard's custodial accounts focus on mutual funds and ETFs, while E-Trade offers a broader range of securities. Each brokerage has different fee structures — some charge no annual custodial account fees, while others may charge a small annual maintenance fee or require a minimum balance.

When comparing custodial accounts across brokerages, check whether the platform charges account fees, what investment options are available, and whether they offer educational resources for teaching young investors. Some brokerages also provide features like automatic rebalancing or dividend reinvestment at no extra cost.

Opening an account for someone under 18 without a custodial structure

If you want to invest through Robinhood for a minor without using a custodial account, the only legal option is to open the account in your own name and manage it yourself. The money remains your property, and you do not have a formal legal obligation to transfer it to the child at any point.

This approach works if you are straightforward saving money for a child's future and do not need the legal protections or tax benefits of a custodial account. However, it does not teach the child about investing or give them ownership of the account. If you want the child to learn by managing their own investments, you will need to use a custodial account at a different brokerage.

What happens when a custodial account holder turns 18

When the minor reaches the age of majority (18 in most states), the custodial account automatically converts to a standard account in their name. The custodian's control ends, and the young adult now owns and manages the account outright. They can withdraw money, change investments, or close the account without the custodian's permission.

Some brokerages send notification letters before the transfer happens, giving the custodian time to discuss the transition with the young adult. After the transfer, the custodian has no further legal authority over the account, though they may still be listed as an authorized contact if the young adult allows it.

Frequently Asked Questions

Can I open a Robinhood account for my child if they are under 18?

No. Robinhood requires account holders to be at least 18 years old. You cannot open an account in a child's name, and Robinhood does not offer custodial accounts that would allow you to do so legally.

If my child is 18, can they use Robinhood?

Yes, an 18-year-old can open a standard Robinhood account. However, Robinhood restricts options trading and margin trading for users under 21, so some advanced features will not be available until they turn 21.

What is the difference between UGMA and UTMA custodial accounts?

UGMA accounts can hold cash, stocks, bonds, and mutual funds. UTMA accounts can hold those items plus real estate, artwork, and other property types. UTMA is available in most states and is generally more flexible, but the specific rules vary by state.

Do custodial accounts have tax advantages?

Custodial accounts are taxed in the child's name rather than the parent's, which can lower the overall tax bill if the child's income is low. However, there are limits — income above a certain threshold (which changes yearly) is taxed at the parent's rate. Consult a tax professional for your specific situation.

Can I move a custodial account from one brokerage to another?

Yes. You can transfer a custodial account from one brokerage to another through a process called an ACAT transfer (Automated Customer Account Transfer). The receiving brokerage will guide you through the steps, and the transfer usually takes five to seven business days.