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<<...My question is what is the best way to minimize taxes for each of them and of course for me. Each account is worth about $2500. No taxes have been paid on any of the accumulation thus far.>>

As was pointed out, you really need to walk a fine line between pure tax avoidance and returns on your investmentst. Obviously, the easiest way to avoid tax issues would be t invest in double tax free municipal bonds. But if you look at the returns, you might puke.

On the other hand, if you actively trade the account, and generate short term gains (with the associated risk of getting slapped around by a bad market timed moved, or just an unexpected happenstance in a specific stock), your taxes might just eat you alive.

So looking at an after tax return is certainly something that is of interest to you.

What you might want to do is to:

1. Check out the Inheritance Strategies folder (just a few doors up from this folder) and read the various posts regarding kids custodial accounts, kids trusts, and the kiddie tax.

2. check out the Taxes Frequently Asked Questions area (get there from the Main Screen via the Fools School area) and read the posts on kids custodial accounts and kiddie taxes.

That will give you a pretty good understanding of what you are dealing with and the tax issues that you need to be aware of.

And, after your reading, you'll probably come to the conclusion that a strong growth stock(s) may be your best course of action, at least until the kids turn 14, and get over the "kiddie tax" hump.

TMF Taxes
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