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Definition of Child's Trust

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Question: 
What is a child's trust?
Answer: 

The term is most likely a reference to a trust designed to hold property for the benefit of a minor until the minor reaches the age of majority (or later). Such a trust could hold property not legally held directly by a minor (real estate, investment securities, etc.) and/or to prevent the minor from wasting the assets. In many cases, the same results can be gained without resorting to a formal trust agreement, by transferring the property to a custodian under a state's Uniform Transfers to Minors Act (Uniform Gifts to Minors Act in Vermont). Child's Trust may also refer to a child's trust fund account established in the United Kingdom for eligible children, and seeded by the British government with a voucher for £250. These accounts are set up for children who qualify for a child benefit under UK law, with the goal that each child will have savings at age 18.

First published on BankersOnline.com 12/15/08

First published on 12/15/2008

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