Can I Open a Brokerage Account for My Child? How Custodial Accounts Work in California and Washington

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

Yes, you can open a brokerage account for your child, but not in the child’s own name alone. A minor cannot sign a brokerage contract, so the standard route is a custodial account under your state’s Uniform Transfers to Minors Act (UTMA), which you can usually open online in one sitting with your ID and your child’s Social Security number. The money legally belongs to the child from day one, and control passes to them at 18 to 25 depending on your state and how the gift is made.

For a California or Washington family earning $750k or more, opening the account is the easy part. The real decisions are whether a custodial account is the right bucket at all (versus a 529, a custodial Roth IRA, or an account you keep in your own name), who should be custodian, and what age your child takes control.

Which account you are actually opening

When a broker offers a “kids account”, it is almost always one of four things. They are taxed and controlled very differently.

Most families searching “brokerage account for my child” mean the first row. UGMA is the older, narrower version that holds only financial assets. California and Washington both use UTMA, which is what your broker will open.

How to open a custodial brokerage account, step by step

1. Pick the broker where you already hold accounts. Custodial accounts are standard at large brokers. Keeping it with your own accounts makes it easier to see and easier for your adviser to coordinate.
2. Choose one custodian and a successor. UTMA accounts have a single custodian. Name a successor in the account paperwork so a court is less likely to be needed to appoint one if something happens to you.
3. Gather the documents. Your government ID, your SSN, and your child’s legal name, date of birth and SSN. The account is reported under the child’s SSN.
4. Set the transfer age if your state allows it. In California the default is 18, but a lifetime gift can delay transfer to 21 if the gift says so in writing (Cal. Probate Code §3920.5). In Washington, gifts end at 21 and the transferor can extend to 25 when naming the custodian (RCW 11.114.200). Broker forms do not always offer the later age by default, so ask.
5. Fund it and pick a simple portfolio. A low-cost, broad index fund is usually enough. Frequent trading creates capital gains that land on the child’s tax return.

Worked example: a $900k Bay Area household

Assumptions: married couple, both W-2 at a biotech and a tech company, $900,000 combined income, two children aged 3 and 7, living in California. They want to set aside money for each child beyond the 529.

• Gift size. For 2026 each parent can give $19,000 per child without filing a gift tax return, so the couple can put $38,000 a year into each child’s UTMA (IRS Rev. Proc. 2025-32). Going above that is allowed. It just requires Form 709 and uses part of each parent’s $15,000,000 lifetime exclusion. There is no UTMA contribution limit.
• Kiddie tax. For 2026, the first $1,350 of the child’s unearned income is tax-free, the next $1,350 is taxed at the child’s rate, and anything over $2,700 is taxed at the parents’ rate. Suppose the 7-year-old’s account grows to $150,000 and throws off $3,000 of dividends in a year. About $300 of that is taxed at the parents’ federal rate. The real cost shows up later, when a large balance produces far more income, or when you sell appreciated funds while the kiddie tax still applies (children under 18, and in some cases up to age 23, per the Form 8615 instructions).
• California. California taxes capital gains as ordinary income and has no lower rate for them (FTB), and it has its own kiddie tax computation on FTB Form 3800. The account is not a way to move income out of California tax. It shifts some income to the child’s lower brackets, and that benefit shrinks as the balance grows.

A common sequence for a family like this is to fund the 529 first for education, then use the UTMA for a modest, long-horizon amount, invested in a tax-efficient index fund with little trading. A balance that grows to several hundred thousand dollars by age 18 is a lot of money to hand a young adult outright, which is the next decision.

The decision that matters: control at 18 or 21

A UTMA gift is irrevocable. You cannot take it back, and when your child reaches the transfer age, the account becomes theirs to spend however they choose. In the meantime the custodian spends it for the child’s benefit. Under both states’ UTMA laws, that spending is in addition to, and does not replace, a parent’s own duty to support the child (Cal. Probate Code §3914, RCW 11.114.140), so it is not meant as a fund for everyday basics you already provide.

For our families, that is usually the deciding factor. If the goal is a sizable amount with conditions or later access, a trust drafted by your estate attorney fits better than a UTMA. If the goal is a starter portfolio your child learns on, a UTMA with a moderate balance works well. Families in Washington should also know the state has its own estate tax with a far lower exclusion than the federal one ($3,000,000 for deaths from July 1, 2026, per WA DOR), which makes the custodian choice worth a conversation with your attorney.

Common mistakes

• Naming the parent who gave the money as custodian without asking the estate question. If the donor is also custodian and dies before the transfer age, the account can be counted in the donor’s taxable estate. Ask your attorney whether the other parent or a relative should serve.
• Accepting the broker’s default transfer age. In both states you may be able to choose a later age, but only in the original transfer.
• Opening a joint account with a teenager. Brokers generally require account owners to be legal adults. A joint account means the money is partly yours, which changes the gift and the tax picture. For a 16-year-old who wants to trade, a custodial account with the teen watching and deciding alongside you usually works better.
• Using the UTMA for college without checking the 529 first. A 529 grows tax-free for qualified education costs and stays under your control. Custodial assets are the child’s and are counted as the student’s asset for financial aid.
• Frequent trading inside the account. Every realized gain is the child’s income and can push them into the parents’-rate zone of the kiddie tax.

What to write down for your child

The account balance teaches very little on its own. What your child needs by the transfer age is why the money is there, what you hoped it would be used for, and how you decided what to invest in. As Kevin puts it: “Your kids don’t need to inherit your portfolio. They need to inherit your decision-making process.”

A one-page note when you open the account (why you started it, what it is for, who to call) and a short yearly review with your child from about age 8 does more than the dollar amount. Our Age Five Wealth Education work is built around exactly that.

Frequently asked questions

What age can you open your own brokerage account?

Brokers generally require the account owner to be a legal adult, which is 18 in California and Washington. Before that, investing happens through a custodial account, where a parent or other adult manages the money for the child. Some brokers market “teen accounts”, but these are still controlled by a parent, so read the ownership terms before choosing one.

Can grandparents open or fund a custodial account?

Yes. A grandparent can open a UTMA as custodian or give to one you already opened. Each grandparent’s gift counts toward their own $19,000 per-child annual exclusion for 2026, separate from yours. Coordinate so the family is not running several small accounts for the same child at different brokers.

Should I open a custodial account or a 529 for a newborn?

For education savings, the 529 usually comes first because growth is tax-free for qualified costs and you stay in control. A custodial account makes sense for money meant for broader use later. Many high-income families use both. See our comparison of 529 plans and custodial accounts.

Next step

Before you open the account, decide three things in writing: the purpose of the money, the custodian and successor, and the transfer age. Then read how gift limits work for UTMA accounts and what the custodian can withdraw. If you want the tax side coordinated with your RSUs and other accounts, our tax management team runs this as part of the Tax & Wealth Assessment.

This is general education, and the right move depends on your family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

Connect on LinkedIn →  · About Kevin