Future Business Leaders of America (FBLA) Agribusiness Practice Test

What is a custodial bank account often referred to as?

1. A joint account for collaborative use

2. A trust fund account for a beneficiary

3. An individual account for exclusive use

4. A temporary account for minors

The correct answer is: A trust fund account for a beneficiary

A custodial bank account is typically referred to as a trust fund account for a beneficiary because it is established to manage assets on behalf of a minor or someone who is unable to manage their own finances. The account is held in the name of the custodian, who is responsible for managing the account until the beneficiary reaches a certain age or meets specific conditions outlined by the trust. In this context, the term "trust fund" emphasizes the fiduciary responsibility of the custodian to safeguard and manage the assets for the benefit of the intended recipient. The custodian ensures that the funds are used appropriately and for the benefit of the minor or designated beneficiary, aligning with the function of a trust. Other options do not accurately capture the primary purpose of a custodial account. A joint account refers to shared access and control over funds by multiple parties, which does not reflect the individual purpose of custodial accounts. An individual account suggests exclusive control by one person, contrasting with the custodial nature where a guardian manages the account for another. A temporary account for minors could imply a broader range of usage and lacks the specificity regarding the fiduciary role and long-term management typically associated with custodial accounts.