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Written by Cari Scribner on May 14, 2021
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Does Robinhood Offer Joint Or Custodial Accounts?

Online investing apps allow you to set up individual brokerage accounts. These are accounts under one person’s name used to buy and sell stocks, bonds, exchange traded funds, and other types of investments.

Some however, let you open joint brokerage accounts. This account gives two or more people equal ownership. Joint accounts are typically common for couples, parents and their children (over 18 years old), and adults caring for aging parents.

Joint accounts let multiple people have control over the investment account. Individuals can perform trades, deposits, withdrawals, and engage in other activities related to their investments.

At this time, Robinhood does not give investors the option of opening a Joint Account, although the info on their website states they hope to do this soon. However, Betterment offers joint accounts and may be a good option for you.

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Betterment Joint Accounts

Betterment allows two people only to be in a joint account. Note that while you can only have a joint account with one person, you can set up multiple taxable investment goals within that joint account.

Joint accounts can be created with any other Betterment customer, and you do not need to be married. If you want to create a joint account with someone who is not a Betterment customer, they must first open an individual Betterment account. There is no obligation to fund the individual account if they simply want to use the joint account that’s created after. The individual account can even be closed once the joint account is set up.

You can only have one joint account at a time. Should you ever need to open a new joint account with a new person, you can simply close your old one.

Betterment lets you link up to three external bank accounts to fund your joint account. Betterment has made it easy to transfer money between your individual and joint investment and cash accounts.

They only support joint accounts with rights of survivorship. This means that upon the death of either owner of the joint account, the ownership of the account goes to the surviving joint account holder.

Either joint account holder can close the Betterment joint account.

What Are Custodial Accounts?

A custodial account lets an adult, such as a parent, grandparent, other relative, or family friend invest money on behalf of a child. This means that while the child owns the assets contained in the account, the adult makes all of the investment decisions.

The account must be transferred to the minor when he or she reaches age 18 or 21. Depending on the state in which you live, this age can be up to 25.

There are significant tax benefits that you will want to consider. These accounts let you keep investing money on behalf of a child, without you holding legal ownership of those assets. That is a huge benefit for income tax purposes.

Unearned income in a custodial account will be taxed to the child rather than to the adult overseeing the account. Most children have little or no earned income. This places them in a much lower tax bracket than the adult, which can mean lower tax bills or even no tax liability at all.

Many of today’s brokerage platforms help adults invest on behalf of the minor with a custodial account and build a diverse portfolio in a wide array of assets, including a combination of stocks, mutual funds, bonds and ETFs.

Since Robinhood does not offer custodial accounts, you may wish to take a look at M1 Finance instead.

M1 Finance Custodial Accounts

You can also open an M1 Finance custodial account if you are an M1 Plus member.

This premium level carries a $125 annual fee, and offers the following:

  • 1% APY checking account: Earn 25x the national average APY for a checking account. That means you’ll earn the same in 2 weeks as you would in an entire year with a big bank.
  • 1% cash back: Earn 1% cash back on qualifying debit card purchases.
  • 2% loans through M1 Borrow: Get a 1.5% reduction on the base rate of M1 Borrow, which is a line of credit.
  • An added afternoon trade window; Invest in the morning or the afternoon, or both when you have more than $25,000 in your investment portfolio.
  • Smart Transfers: Set up a system of automated transfers and optimize your money across your spending, your investing, and your borrowing at M1.

M1 custodial accounts work like your regular M1 Invest account: build your pie, invest in it automatically, and watch it grow.

M1 lets you withdraw custodial account funds anytime for things that benefit the child, like buying their first car, paying for higher education, renting their first apartment, and more. Once the child reaches adulthood, they take over control of the account and can make withdrawals as they choose.

Conclusion

In order to stay competitive, today’s online investing apps are working hard to offer a wide variety of financial products including joint and custodial accounts.

However, you will not find either of these accounts on Robinhood.

Instead, you may wish to look at Betterment for joint accounts, and M1 Finance to open a custodial account.

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Article written by Cari Scribner

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