In the world of finances, the more complicated an individual’s or company’s investments and money situations are, the more they might want to have someone look after their interests. That way, they can concentrate on the more important daily operations of their business.
So What is a Custodianship?
A custodian is an individual or company chosen to hold the finances and investments of a particular person or entity. Typically, large companies and corporations opt to hire a custodian, which is usually another firm. This custodian then can get an employee identification number online and has the legal right and responsibility to carry out the desires of the ownership company. These actions can include such things as making investments, sending payments, or instigating other changes to the parent company’s business dealings.
However, this kind of arrangement does not allow the custodian to oversee or handle the day-to-day operations of the institution. For example, conventional consumer and commercial banking are off-limits. This includes such services as personal accounts, mortgages, personal lending, automatic teller machines, and any other activities related to everyday branch banking.
Who can be a Custodian?
Usually, a custodian overseeing someone’s money is a financial institution of some sort, though an individual may have that designation. Regardless, the person or entity must be classified as a qualified custodian and follow the rules and regulations of the federal Security and Exchange Commission. This typically narrows the options to banks, dealers and brokers. In the case of a minor, an adult individual may be granted custodianship to oversee the financial accounts of that youngster until he or she reaches maturity. Nonetheless, the minor always retains ownership of the finances and investments.
Regardless, the custodian must always provide regular bank statements and updates to whomever they are representing to keep them abreast of developments. They must also provide information to allow the person represented to check the status of the EIN online, or via other means.