Yes, parents can open a bank account for a child, but the account type and your control over it depend on the child's age

A parent can open a bank account in a child's name at most banks and credit unions. The account belongs to the child, but until they reach the age of majority (18 in most states), you have legal authority to manage it. The bank will require your identification and the child's Social Security number. What you cannot do is treat the account as your own money — the funds legally belong to the child, even though you control access.

The mechanics differ slightly depending on whether the child is an infant, a school-age child, or a teenager. A newborn cannot sign documents, so you sign on their behalf. A teenager may be able to co-sign or open their own account with your permission, depending on the bank's policy. Most banks allow parents to open accounts for children of any age, but some set a minimum age of 13 or 16 for certain account types.

Key Takeaways

  • Parents can open a custodial or UTMA/UGMA account for a child at any age, using the child's Social Security number and the parent's identification.
  • A custodial account gives the parent full control until the child reaches age 18 or 21, depending on state law, at which point the account transfers to the child.
  • UTMA and UGMA accounts are irrevocable gifts that may affect the child's financial aid may be able to access, so understand the tax and aid implications before opening one.
  • Most banks require the parent to be present in person to open an account for a young child, though some allow online opening for teenagers.
  • The account is the child's property, not the parent's, so using the money for non-child expenses can create legal and tax problems.

Custodial accounts: the standard way parents manage money for children

A custodial account is a bank account opened in the child's name with a parent or guardian acting as custodian. You control the account and can deposit, withdraw, and spend the money for the child's benefit — education, medical care, living expenses, activities. The child's name and Social Security number appear on the account, but the child cannot access it or make decisions about it until they reach the age of majority.

When the child turns 18 (or 21 in some states), the account automatically transfers to them. At that point, you lose all control. The child can withdraw the money, close the account, or spend it however they choose. This is a hard important date — there is no way to extend your control or claw back the money. If you are uncomfortable with that outcome, a custodial account may not be the right choice.

To open a custodial account, bring your ID and the child's Social Security number to a bank or credit union branch. Most banks do not allow online opening of custodial accounts for young children, though some permit it for teenagers. The account will be titled something like "John Smith, as custodian for Sarah Smith" or "Sarah Smith, UTMA" (see below). You will be the only person who can access the account until the child is old enough to be added as a signer.

UTMA and UGMA accounts: irrevocable gifts with tax consequences

UTMA (Uniform Transfers to Minors Act) and UGMA (Uniform Gifts to Minors Act) accounts are a specific legal structure for custodial accounts. They exist in most states, though the rules vary by state. The key difference from a regular custodial account is that UTMA and UGMA accounts are irrevocable gifts — once you put money in, it belongs to the child permanently. You cannot take it back, even if your circumstances change or the child misbehaves.

UTMA and UGMA accounts have tax advantages for small amounts of money. The first portion of earnings (usually around $1,300 per year, though this changes annually) is tax-free. Earnings above that are taxed at the child's rate, which is typically lower than the parent's rate. However, if the account grows large, the child may owe taxes on the earnings, and the account may reduce their may be able to access for financial aid in college.

Before opening a UTMA or UGMA account, understand that you are making a permanent gift. If you want to retain the option to use the money for yourself or to control it after the child turns 18, use a regular custodial account instead. Ask the bank which type of account they are opening — some banks use UTMA/UGMA as their default custodial structure, while others offer both options.

What documents and information you will need

To open an account for a child, bring a government-issued photo ID (driver's license, passport, or state ID) and the child's Social Security number. If the child is old enough to come to the bank, bring them along — some banks require the child to be present, though this is becoming less common. If the child is an infant or very young, most banks will allow you to open the account with just your ID and their Social Security number.

Some banks ask for additional documentation, such as proof of address (a utility bill or lease) or a birth certificate. A few banks require a minimum deposit to open the account, typically $25 to $100. Online banks often have lower or no minimum deposits, but they may not allow you to open a custodial account online — call ahead to confirm.

If you are opening the account as a guardian rather than a parent (for example, if you are a grandparent with legal guardianship), bring documentation of your guardianship status. The bank will need to verify that you have legal authority to manage the child's money.

How much control you have and what you can spend the money on

As custodian, you can withdraw money from the account and spend it on anything that benefits the child. This includes obvious expenses like school tuition, medical bills, and clothing. It also includes less obvious ones: sports lessons, music lessons, summer camp, a car for a teenager, or even a portion of household expenses if the child lives with you. The rule is that the money must be spent for the child's benefit, not for your own use.

What you cannot do is use the money to pay for things you would pay for anyway. If you would feed and house the child regardless, using the account to pay for groceries or rent is legally questionable and can create tax problems. The IRS may view it as a distribution to you rather than an expense for the child. If you are uncertain whether a particular expense qualifies, ask the bank or consult a tax professional before withdrawing the money.

You cannot borrow money from the account and repay it later. You cannot invest the money in your own business or use it as collateral for a personal loan. The account is the child's property, and you are a steward of it, not the owner.

What happens when the child turns 18 or 21

When the child reaches the age of majority, the account transfers to them automatically. In most states, this happens at age 18. In a few states (California, Nevada, and Utah), UTMA accounts transfer at age 21 unless you specify age 18 when opening the account. Regular custodial accounts may also transfer at age 21 in some states — ask the bank which age applies to your account.

Once the account transfers, you have no legal right to access it or control how the money is spent. The child can withdraw it all, spend it on something you disapprove of, or lose it to poor financial decisions. There is no way to extend your control or add conditions to the transfer. If you want to maintain influence over how the money is used, you would need to set up a trust instead of a custodial account, but that is a more complex and expensive process.

Some banks notify the account holder when the transfer is about to happen. Others do not. If you want to may support a smooth transition, contact the bank a few months before the child's 18th birthday to ask what will happen and whether the child needs to take any action.

Alternatives if a custodial account does not fit your situation

If you want to save money for a child but do not want it to transfer to them at age 18, a 529 college savings plan is an option. You own the account, not the child, and you retain control indefinitely. The money grows tax-free if used for education expenses. However, if the child does not go to college, you may owe taxes and penalties on the earnings.

A trust is another option if you want to set conditions on how the money is used or delay when the child receives it. You can specify that the money be used only for college, or that it be held until the child turns 25. However, setting up a trust requires a lawyer and costs several hundred dollars or more. It is usually only worth it for large amounts of money.

If you straightforward want a place to save money for the child without giving them legal ownership, you can open a regular savings account in your own name and earmark it mentally for the child. This gives you complete control and flexibility, but it offers no tax advantages and the money is technically yours if you face creditors or legal judgments.

Frequently Asked Questions

Can I open a bank account for a child without their Social Security number?

No. Banks are required by federal law to collect a Social Security number or tax ID for any account. If the child does not have a Social Security number yet, you can obtain one from the Social Security Administration using Form SS-5. The process takes a few weeks. Some banks will let you open the account once you have applied for the number, using the process receipt as proof.

What if I want to add the child as a signer on the account later?

Most banks allow you to add a child as a signer once they reach a certain age, typically 13 or 16. This gives the child the ability to make withdrawals and deposits, but you retain access and control. Adding a signer is different from transferring the account — you remain the custodian. Contact your bank to ask at what age they allow co-signers and what documentation they need.

Does a custodial account affect the child's credit score?

No. A custodial account does not appear on the child's credit report and does not build credit history. Credit reports track borrowing and repayment, not savings. If you want the child to build credit, you would need to add them as an authorized user on a credit card or help them open a credit-builder loan as a teenager.

Can I use the account to pay for my own expenses if I am the child's sole provider?

Legally and tax-wise, no. Even if you are the only income earner in the household, the money in the account belongs to the child. Using it for your own expenses — rent, utilities, food for yourself — can create tax problems and may be considered misappropriation of the child's funds. If you need to cover household expenses, use your own income or savings.

What happens to the account if I die before the child turns 18?

The account remains the child's property and passes to their guardian or to a court-appointed conservator. The money does not go to your estate. If you want to may support the account is managed properly after your death, name a successor custodian when you open the account, or include instructions in your will. Some banks allow you to name a successor custodian; others require a court order.