Yes, but the account structure depends on the child's age and your relationship

A grandparent can open a bank account for a grandchild, but the rules change based on whether the child is a minor or an adult. For minors, you will need to open a custodial account — a legal structure where you manage the money until the child reaches the age of majority (usually 18 or 21, depending on your state). For adult grandchildren, they can open their own account, though you can fund it or co-own it if they consent.

The bank will require proof of your relationship to the child and identification for both of you (or just you, if the child is very young). Some banks have age limits — many will not open accounts for children under 13 without a parent or legal guardian present, even if a grandparent is funding it. A few banks allow accounts for children as young as newborns if a parent or guardian co-signs.

The key difference between a custodial account and a regular joint account is control: in a custodial account, the money legally belongs to the child from day one, but you control it until they reach adulthood. In a joint account, both owners have equal access and ownership rights, which can create tax and legal complications.

Key Takeaways

  • Custodial accounts are the standard way for grandparents to save for minors, and the money belongs to the child even though you manage it.
  • You will need a birth certificate or other proof of relationship, your ID, and the child's Social Security number to open a custodial account.
  • Some banks require a parent or legal guardian to be present when opening an account for a child under 13, even if a grandparent is the one funding it.
  • Custodial accounts have tax advantages for the first $1,250 of annual earnings (this amount changes yearly), but withdrawals for non-education expenses may trigger taxes on the child's return.
  • Once the child reaches adulthood, the account converts to their name and they gain full control — you cannot prevent them from withdrawing the money.

What you need to bring to the bank

Bring your government-issued ID (driver's license, passport, or state ID) and the child's birth certificate or Social Security card. The bank will ask for the child's full legal name, date of birth, and Social Security number. If the child is old enough to come with you, some banks ask to see them in person, though many will accept a birth certificate as proof of identity for infants and toddlers.

If a parent or legal guardian is required to be present (which varies by bank and the child's age), they will need to bring their ID as well. Call the bank ahead of time to ask whether the parent must attend or whether you can open the account alone. Some banks allow grandparents to open custodial accounts without parental involvement; others treat it as a family decision and want at least one parent present.

Custodial accounts versus joint accounts

A custodial account (also called a UTMA or UGMA account, depending on your state) is held in the child's name with you as the custodian. The money belongs to the child legally, but you control it until they turn 18 or 21. When they reach that age, the account automatically transfers to their control — you have no say in how they spend it. This is the safest structure for grandparents because it protects the money for the child's benefit and has clear tax treatment.

A joint account lists both you and the grandchild as owners with equal rights. Either of you can withdraw money at any time. This is simpler to set up but creates problems: the money is considered yours for tax purposes until the child turns 18, and if you face creditors or a lawsuit, the account could be seized. If the grandchild reaches adulthood, they can drain the account without your permission.

A third option is an account in your name with the child as beneficiary. The money stays yours legally, and you keep full control. When you die, it passes to the child. This protects the money from the child's creditors while you are alive, but it does not give the child any access during your lifetime, and it may complicate your estate.

Tax treatment and annual limits

Custodial accounts have tax advantages for the first portion of earnings each year. For 2024, the first $1,250 of investment income (interest, dividends, capital gains) is tax-free on the child's return. The next $1,250 is taxed at the child's rate, which is usually lower than yours. Anything above $2,500 is taxed at your rate (the "kiddie tax" rule). These dollar amounts change annually, so check with the bank or a tax professional for the current year.

Withdrawals from the account do not count as income — they are just moving money that already belongs to the child. However, if you withdraw money for something other than the child's benefit (like paying your own bills), that can trigger legal problems and tax consequences. The account must be used for the child's benefit: education, medical care, living expenses, or savings for their future.

What happens when the grandchild turns 18 or 21

When the child reaches the age of majority in your state (18 in most states, 21 in a few), the custodial account automatically converts to a regular account in their name. You lose all control. They can withdraw the entire balance, close the account, or do whatever they want with the money. There is no legal way to prevent this or to extend your control past the age of majority.

If you want the money to remain restricted or to be used for a specific purpose (like college), a custodial account is not the right tool. Instead, you would need to work with a lawyer to set up a trust, which allows you to name conditions on how and when the money can be spent. A trust is more expensive to set up but gives you much more control over the money's use after you die or if the grandchild reaches adulthood.

Banks that allow grandparents to open accounts for grandchildren

Most major banks and credit unions offer custodial accounts. Chase, Bank of America, Wells Fargo, and Citibank all have custodial savings or checking options. Credit unions often have lower fees and simpler processes. Online banks like Ally and Marcus also offer custodial accounts, though some require you to open the account online and may have age restrictions.

Call ahead or check the bank's website for their specific rules on age limits, required documents, and whether a parent must be present. Some banks have a minimum deposit (often $25 to $100), and some charge monthly fees unless you maintain a certain balance. A few banks waive fees for accounts opened for children under a certain age.

If the parent objects or you do not have legal custody

If you want to open an account for a grandchild but the child's parent objects, the bank will likely require parental consent or the parent's presence. Banks treat parents as the legal decision-makers for minors, so they will not override a parent's wishes. If you have legal custody or guardianship, bring the court order — that gives you the authority to open the account without parental consent.

If you have no legal relationship to the child (you are not the custodian or guardian), you can still fund an account that a parent opens, but you cannot open one in your name as custodian. The parent would be the custodian, and you would straightforward contribute money to it. This is a common arrangement when grandparents want to save for grandchildren but the parent retains legal control.

Frequently Asked Questions

Can I open a custodial account for a grandchild who lives in a different state?

Yes. You can open an account in your state or the grandchild's state — it does not matter. The rules that explore are the state where the account is held. If you want to use a specific bank that is not in your area, many banks allow you to open accounts online or by mail, though some still require an in-person visit for custodial accounts.

What if I want to leave money to my grandchild in my will instead of opening an account now?

You can do that, but the money will go through probate (the court process that settles your estate), which takes months and costs money in legal fees. A custodial account or a trust avoids probate and gets the money to your grandchild faster. Talk to a lawyer about which structure makes sense for your situation.

Can I remove money from a custodial account if I need it for an emergency?

Legally, no — the money belongs to the child, not to you. Withdrawing it for your own use is considered misuse of the account and can have legal and tax consequences. If you need access to your own money, do not put it in a custodial account. Keep your money separate and fund the grandchild's account with money you can afford to give away.

Do I need a lawyer to open a custodial account?

No. The bank handles all the paperwork. You just need to bring ID, the child's birth certificate or Social Security number, and fill out a form. A lawyer is only necessary if you want to set up a trust or if there are custody disputes or complications with the child's parents.

What if the grandchild's parent wants to be a co-custodian?

Many banks allow multiple custodians on the same account. This means both you and the parent can manage the money and make withdrawals. It can be helpful if you want shared responsibility, but it also means either of you can withdraw the entire balance without the other's permission. Make sure you trust the other custodian completely.