At the outset, it should be clarified that a child is not responsible for the payment of zakat, even if they possess wealth equal to or exceeding the niṣāb. The obligation of zakat is contingent upon bulūgh (puberty).^[1]

When a parent purchases zakatable assets for their child, two possible scenarios arise.

The first scenario is where the parent purchases the asset on behalf of the child, such that the child is considered the owner, while the parents merely manage or safeguard it for the time being. In this case, if the child has not yet reached bulūgh, zakat is not due on that wealth. Once the child reaches bulūgh, and the wealth reaches the niṣāb amount, he/she must calculate and pay the annual zakat due. This obligation rests on the bāligh child, not the parents, although the parents may discharge it on the child’s behalf with their permission.

The second scenario is where the parents, while managing and safeguarding the asset, also retain ownership of it. In other words, they have not actually purchased it on behalf of the child nor gifted it to them; rather, they remain the owners and merely intend either to gift it to the child upon reaching adulthood or to spend it on the child in the future. In this case, the asset remains part of the parents’ wealth and must be included in their personal zakat calculation each year.

A practical way to determine which scenario applies is to consider whether, once fiscally responsible, the child would be free to use, sell, dispose of the asset, or spend the “gifted” funds as they wish. If the child has full discretion, then the wealth belongs to them. If the funds may only be used for specific purposes at the parents’ discretion, then ownership remains with the parents.

Purchasing gold or other zakatable assets for one’s children, or gifting zakatable assets to one’s children, follows this same framework: the determining factor is the child’s actual ownership, not merely the parents’ intention to gift it to the child in the future or to spend it on them later.

As for a traditional 529 plan, practically speaking, only the second scenario applies. The parent is the account owner and retains full control over the funds. Even if the child is named as the beneficiary and the parent intends to gift the funds to the child or use them for the child’s expenses, this does not create ownership for the child. Accordingly, the account must be included in the parents’ zakat calculation each year, even after the child reaches bulūgh, unless ownership is formally transferred. This could occur if the account holder designation is changed to the (adult) child (where permitted by the plan), thereby effectively relinquishing ownership, or if the funds are withdrawn and genuinely gifted to the child, whether mature or non-mature. In that case, the ruling would shift to the first scenario, and a bāligh child would be responsible for zakat if the niṣāb conditions are met.^[2]

This differs from custodial accounts, such as custodial 529 accounts or custodial IRAs (such as the newly introduced “Trump accounts”), where the child is the legal owner and the parent merely acts as custodian.^[3] In such cases, the wealth belongs to the child, and zakat would not apply until they reach bulūgh.

And Allah knows best.

Mawlana Muhammad Bilal Khizar
Student, Darul Iftaa Chicago

Reviewed and approved

Mufti Abrar Mirza
Head Mufti, Darul Iftaa Chicago