What a grandparent can and cannot do alone

A grandparent cannot open a checking account in a grandchild's name without the child's parent or legal guardian present and signing off. Banks require the account owner's parent or guardian to authorize the account, verify their identity, and sign the paperwork. This is true even if the grandparent is paying for the account and will be the one depositing money into it.

What a grandparent can do is open a joint account with a grandchild, provided the grandparent is also a signer on the account. This makes both the grandparent and grandchild account owners, and either can withdraw money. Some grandparents use this route to fund a grandchild's savings while keeping some control over the account until the child is older.

A grandparent can also open an account in their own name and transfer money to a grandchild's account later, or set up a savings vehicle like a 529 plan or custodial account that is legally set aside for the grandchild's benefit. These routes do not require the grandchild to be present or to sign anything.

Key Takeaways

  • A grandparent must have the grandchild's parent or legal guardian present and signing to open an account in the grandchild's name alone.
  • A grandparent can open a joint account with a grandchild without the parent present, but both the grandparent and grandchild become account owners with equal withdrawal rights.
  • Banks verify the identity of anyone who will be a signer or owner on the account, so bring a government ID and be prepared to answer questions about your relationship to the child.
  • If the goal is to set money aside for a grandchild without giving them access yet, a custodial account or 529 plan may work better than a checking account.

When the parent or guardian must be present

If you want the account to be in the grandchild's name only—meaning the child is the sole owner and you are not a signer—the parent or legal guardian must come to the bank with you and the grandchild. The parent will need to bring a government-issued ID, proof of address, and the child's Social Security number or tax ID. The parent signs the account agreement and is responsible for any overdrafts or fees until the child reaches the age of majority (usually 18).

Some banks allow the parent to authorize the account by phone or video call if they cannot come in person, but this is less common. Call your bank ahead of time to ask whether they offer remote authorization. If they do, you will still need the parent's ID information and signature, usually collected electronically or by mail.

The grandchild does not need to be present for this process, though many banks ask to see the child at least once before the account is fully activated. This is part of the bank's fraud prevention process.

Opening a joint account with your grandchild

A joint account lists both you and your grandchild as owners. Either of you can deposit or withdraw money without permission from the other. To open a joint account, you and your grandchild both need to be present at the bank (or authorized remotely, depending on the bank's policy). You will both need to bring ID, and you will both sign the account agreement.

The advantage of a joint account is that you do not need the parent's permission or signature. The disadvantage is that your grandchild has full access to the money once the account is open. If your goal is to teach your grandchild about banking and saving, a joint account can work well. If your goal is to set money aside that the child cannot touch until they are older, a joint account is not the right tool.

Be aware that a joint account becomes part of your grandchild's assets if they face legal trouble later—for example, if they are sued or file for bankruptcy. The money in the account could be seized to pay a judgment. For this reason, some grandparents prefer custodial accounts, which offer more legal protection.

Using a custodial account instead

A custodial account is opened in the grandchild's name, but you are the custodian—the adult who manages the money until the child reaches a certain age (usually 18 or 21, depending on your state and the type of account). The child does not have access to the account until that age arrives. You can deposit money, but the child cannot withdraw it without your permission.

To open a custodial account, you need the grandchild's Social Security number and your own ID. You do not need the parent's permission, though it is a good idea to tell them what you are doing. Custodial accounts are offered by most banks and brokerages. The account is registered under the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA), depending on your state.

The trade-off is that once the child reaches the age of majority, the account becomes theirs completely, and you lose control over how they spend it. You cannot set conditions like "only for college" or "only if they graduate." If you want more control, a trust or a 529 education savings plan may be better options to discuss with an estate attorney or financial advisor.

What documents and information you will need

Bring your government-issued ID (driver's license, passport, or state ID card) to the bank. You will also need the grandchild's Social Security number or Individual Taxpayer Identification Number (ITIN). If the parent is coming with you, they will need their ID and proof of address (a recent utility bill, lease, or mortgage statement).

The bank will ask questions about the purpose of the account, your relationship to the grandchild, and how you plan to fund it. Be straightforward: "I am the grandparent and want to help with savings" is a normal answer. Banks ask these questions as part of their fraud prevention process, not because there is anything wrong with what you are doing.

If you are opening a custodial account, some banks may ask for the parent's contact information so they can reach out if there are questions later. This is routine and does not mean the parent has to sign anything.

Age limits and account restrictions

Most banks allow you to open a checking account for a grandchild of any age, including infants. However, some banks have a minimum age—often 13 or 16—for accounts that come with a debit card. If your grandchild is younger than that, you may be able to open a savings account instead, or a checking account without a debit card.

Once your grandchild reaches 18, they become a legal adult and can manage the account themselves. If it is a joint account, they can remove you as a signer. If it is a custodial account, it automatically becomes theirs to control. Plan ahead if you want to transition the account or discuss money management with your grandchild before they turn 18.

Some banks restrict what a minor can do on their own—for example, a 10-year-old might not be able to open a savings account without a parent or guardian, but a 16-year-old might. Call your bank to ask about their specific age policies before you go in.

Tax and financial aid considerations

Money in a custodial account or a joint account in your grandchild's name counts as the child's asset for financial aid purposes. This can reduce the amount of financial aid they receive in college, because colleges expect students to use their own savings first. If you are saving for college, a 529 plan is often a better choice because it counts as a parent asset (if the parent is the account owner), not a student asset, and has less impact on financial aid.

Custodial accounts also have tax implications. Any interest or investment earnings above a certain threshold are taxed at the child's rate, which is usually lower than yours. For 2024, the first $1,450 of unearned income is tax-free for a dependent child, and the next $1,450 is taxed at the child's rate. Amounts above that are taxed at the parent's rate. Ask your bank or a tax professional about the details for your situation.

If you are straightforward depositing your own money into the account, there are no tax consequences for you. The money is a gift, not income.

Frequently Asked Questions

Can I open an account for my grandchild if their parent won't give permission?

If you want the account in the grandchild's name only, no—the parent or legal guardian must authorize it. However, you can open a custodial account or a joint account without the parent's permission. A custodial account is often the better choice because the child cannot access the money until they are older, and you do not need the parent to sign anything.

What happens to the account when my grandchild turns 18?

If it is a joint account, your grandchild can remove you as a signer and take full control. If it is a custodial account, it automatically becomes theirs to manage. If it is an account in their name only with you as an authorized user, they can remove you. Plan to have a conversation with your grandchild before this happens about how to manage the account.

Can I set up the account so my grandchild can only use it for certain things, like school?

A checking or savings account does not allow you to restrict how the money is spent once your grandchild has access to it. If you want to set conditions, a 529 education savings plan (for college) or a trust (for other purposes) are better tools. These require more setup and legal paperwork, so talk to an attorney or financial advisor about whether they make sense for your situation.

Do I need to report the money I put into my grandchild's account to the IRS?

Gifts to your grandchild are not taxable income for them, and you do not report them on your tax return unless you are giving more than the annual gift tax exclusion (which is $18,000 per person in 2024, but rules vary). The money in the account may earn interest or investment returns, which are taxable. Ask a tax professional if you are unsure.

What if my grandchild's parent is deceased or I have custody?

If you have legal custody or guardianship, you have the authority to open an account in your grandchild's name without the other parent's permission. Bring your custody or guardianship papers to the bank along with your ID and the child's Social Security number. The bank will verify your legal status before opening the account.