Custodial Wallets
Custodial wallets are wallets where the private key is held by a third party (e.g., an exchange). Whoever controls the private key also controls the funds. When contracting with qualified and reputable custodians, custodial wallets can offer users increased security and formality over their assets. Custodial wallets may be more suitable for entry level users who are comfortable passing the responsibility of maintaining the private keys to these third parties.
Note: These are non-technical definitions meant for a general audience and should not be used as legal definition