Custodial Agreement

AAA

DEFINITION of 'Custodial Agreement '

An arrangement whereby one holds an asset or property on behalf of the actual owner (beneficial owner). Such agreements are generally entered into by state agencies or companies to administer various benefit programs.

INVESTOPEDIA EXPLAINS 'Custodial Agreement '

An example of a custodial agreement would be a company retirement plan. Many, if not most, companies hire a third party to administer such plans: to collect payments from the employer and employees, invest the funds and disburse the benefits. The advantage of this arrangement is that the beneficial owner gets professional advice, which saves time, and often pays lower fees than would otherwise be available had the monies been handled by each individual owner.

RELATED TERMS
  1. Final Return For Decedent

    The final tax return filed for an individual in the year of that ...
  2. Primary Beneficiary

    A beneficiary in a will, trust or insurance policy that is first ...
  3. Heir

    HeirA person who inherits some or all of the estate of another ...
  4. Beneficiary

    Anybody who gains an advantage and/or profits from something. ...
  5. Inheritance

    All or part of a person's estate/assets that is given to an heir ...
  6. Intestate

    The act of dying without a legal will. Determining the distribution ...
Related Articles
  1. It can be great to live in the moment, but the actions and decisions you make now can greatly impact your sense of financial security down the road.
    Personal Finance

    How Do Americans Keep Minimizing Their Net Worth?

    It can be great to live in the moment, but the actions and decisions you make now can greatly impact your sense of financial security down the road.
  2. Investing on margin can be profitable but it's a risky play that needs care.
    Trading Strategies

    Margin Investing: Big Risk, Big Reward

    Investing on margin can be profitable but it's a risky play that needs care.
  3. Many of us fantasize about winning a big lottery jackpot. Let’s say that actually happened? What would you do with the money? How would you manage it?
    Professionals

    Tips For Managing A Cash Windfall

    Many of us fantasize about winning a big lottery jackpot. Let’s say that actually happened? What would you do with the money? How would you manage it?
  4. With stocks surging, financial advisers and their wealthy clients are asking why they should continue to bother with poorly performing alternatives.
    Professionals

    Are Advisors Off Alternatives?

    With stocks surging, financial advisers and their wealthy clients are asking why they should continue to bother with poorly performing alternatives.
  5. Even though inflation currently seems tame, it's still the worst enemy of retirees. Here are some tips to reduce its impact.
    Professionals

    Tips For Managing Inflation In Retirement

    Even though inflation currently seems tame, it's still the worst enemy of retirees. Here are some tips to reduce its impact.
  6. The average retiree’s check will rise by 1.7% in 2015, the Social Security Administration says. And the ceiling on taxable earnings will rise, as well.
    Professionals

    How Social Security Will Change In 2015

    The average retiree’s check will rise by 1.7% in 2015, the Social Security Administration says. And the ceiling on taxable earnings will rise, as well.
  7. Despite the popularity of the tax-advantaged college-savings vehicle, certain aspects are still misunderstood. Check your knowledge with this 529 quiz.
    Savings

    How Much Do You Know About College Savings Plans?

    Despite the popularity of the tax-advantaged college-savings vehicle, certain aspects are still misunderstood. Check your knowledge with this 529 quiz.
  8. The demands of bellwether ultra-wealthy clients are changing; here's what to expect and how to adjust your practices.
    Professionals

    What Advisors Can Learn From Ultra-Wealthy Clients

    The demands of bellwether ultra-wealthy clients are changing; here's what to expect and how to adjust your practices.
  9. For many retirees with IRAs and other retirement plans, the end of the year means taking a minimum distribution. Here's what you need to know.
    Professionals

    Required Minimum Distributions: A Reminder

    For many retirees with IRAs and other retirement plans, the end of the year means taking a minimum distribution. Here's what you need to know.
  10. Investing Basics

    Online Portfolio Management, DIY or Fee-Based Financial Advisor: Which Is Right For You?

    Should you use an online financial planning service, or do professional, fee-based financial planners justify their higher costs?

You May Also Like

Hot Definitions
  1. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  2. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  3. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  4. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  5. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
  6. Annual Percentage Rate - APR

    The annual rate that is charged for borrowing (or made by investing), expressed as a single percentage number that represents ...
Trading Center