Yes, grandparents can open a bank account for a grandchild, but the rules depend on the child's age and your legal relationship

If your grandchild is under 18, you can open a custodial account (also called a minor account) at most banks and credit unions. The account belongs to the child, but you control it until they reach the age of majority — usually 18 or 21, depending on your state and the account type. You will need the child's Social Security number, proof of your identity, and proof of your relationship to the child. Some banks also require written permission from a parent or legal guardian.

If your grandchild is 18 or older, they must open the account themselves, though you can go with them and help with the paperwork. You cannot open an account in their name without their presence and consent, even if you are a grandparent.

The specific documents and rules vary by bank, so call ahead or visit a branch to ask what they need before you go. Some institutions have stricter requirements than others, and a few do not offer custodial accounts at all.

Key Takeaways

  • Grandparents can open a custodial account for a grandchild under 18 at most banks, but you will need the child's Social Security number and proof of your identity.
  • A custodial account belongs to the child, but you control the money and decisions until they reach 18 or 21, depending on state law and account type.
  • Many banks require written permission from a parent or legal guardian before opening a custodial account, even if you are the grandparent.
  • If your grandchild is 18 or older, they must open the account themselves — you cannot open it in their name without their presence and consent.
  • Rules and required documents differ by bank, so contact your institution before visiting to confirm what you need to bring.

What documents you will need to bring

Bring a government-issued photo ID for yourself — a driver's license, passport, or state ID card. You will also need the child's Social Security number or Individual Taxpayer Identification Number (ITIN). If you do not have it, ask the child's parent for it; the bank cannot open the account without it.

Most banks ask for proof of the child's address, which can be a utility bill, lease, or school enrollment letter in the child's name or the parent's name at the same address. Some banks will accept a birth certificate as proof of the child's identity and your relationship to them. Bring it if you have it.

Call the bank before you go and ask specifically what they need. Different branches of the same bank sometimes have different requirements, and asking ahead saves a wasted trip.

Whether you need a parent's permission

Most banks require written consent from at least one parent or legal guardian before opening a custodial account for a grandchild. A few banks will open the account with just your signature if you can show you are the legal guardian, but this is rare. If you are the legal guardian, bring the guardianship papers.

If you are not the legal guardian and the parents are alive and involved, you will almost certainly need their written permission. The bank may provide a form, or they may accept a letter signed by a parent stating they consent to the account. Ask the bank what form they accept before you ask the parent to sign anything.

If the child's parents are deceased and you are the legal guardian, the guardianship order itself usually satisfies the bank's requirement. If you are not the legal guardian but are raising the grandchild, you will still need written permission from whoever holds legal guardianship — a parent, another relative, or the state.

The difference between UTMA and UGMA accounts

Many banks offer custodial accounts under two legal frameworks: the Uniform Transfers to Minors Act (UTMA) and the Uniform Gifts to Minors Act (UGMA). Both let you control the account until the child reaches a certain age, but they differ in what assets they cover and when control transfers.

UTMA accounts (available in most states) can hold cash, stocks, bonds, real estate, and other property. UGMA accounts (older and less common) typically cover only cash and securities. With UTMA, control usually transfers at 18 or 21, depending on your state. With UGMA, it transfers at 18 in most states. Ask the bank which one they offer and what the age of transfer is in your state — this matters if you plan to keep money in the account for several years.

For a basic savings account, the difference rarely matters. Most banks straightforward call it a "minor account" or "custodial savings account" and do not specify UTMA or UGMA. If the bank does specify, ask them to explain the transfer age and what happens to the money when the child turns that age.

What happens when your grandchild turns 18 or 21

When the child reaches the age of majority (18 or 21, depending on your state and account type), control of the account transfers to them automatically. You lose the ability to withdraw money, make decisions about the account, or see the balance. The child can then withdraw all the money, close the account, or keep it open and manage it themselves.

Some banks send a notice before the transfer happens, giving you time to discuss the account with your grandchild. Others do not. If you want to have a conversation about the money before control transfers, start it a few months early. There is no legal way to keep control of the account after the transfer age, and you cannot require the child to keep the money in the account or use it for a specific purpose.

If you want to set conditions on how the money is used — for college, for example — a custodial account is not the right tool. You would need a trust, which requires a lawyer to set up. A custodial account is straightforward a way to hold money for a minor until they are old enough to manage it themselves.

Tax reporting for custodial accounts

The bank will issue a 1099-INT or 1099-DIV form each year if the account earns interest or dividends. The form goes to the child, not to you, because the account belongs to the child for tax purposes. The child (or their parent, if the child is too young to file) must report this income on their tax return.

In most cases, a minor's unearned income (interest, dividends) below a certain threshold is not taxable. That threshold changes each year. For 2024, a dependent child can earn up to $1,450 in unearned income before owing federal income tax, though state rules vary. If the account earns more than that, the child will owe tax on the excess. A parent or tax professional can help you understand whether the account will trigger a tax filing requirement in your state.

You do not report the account on your own tax return, and you do not claim the interest or dividends as income. The account is the child's asset, not yours, even though you control it.

Alternatives if a bank will not open a custodial account

A few banks and credit unions do not offer custodial accounts. If yours does not, you have other options. You can open a regular savings account in your own name and set aside money for the grandchild, but this creates a problem: the money is legally yours, not the child's, and it could affect the child's may be able to access for financial aid or means-tested benefits later. It also leaves the money vulnerable if you face a lawsuit or creditor claim.

You can ask a parent to open an account in the child's name with you as an authorized user. This gives you access to the account without the legal complications of a custodial account, though you still do not have full control — the parent does. Some banks allow this, others do not.

If you want a more formal arrangement, a lawyer can help you set up a trust for the grandchild. This costs money upfront but gives you clear control and lets you set conditions on how the money is used. For most families, though, a custodial account at a bank that offers them is the simplest and cheapest option.

Frequently Asked Questions

Can I open a custodial account if the parents do not want me to?

No. Banks require written consent from a parent or legal guardian. If the parents refuse, the bank will not open the account. If you are the legal guardian and the parents are not involved, you can open it without their consent. If you are concerned about a child's welfare or financial security, talk to a family lawyer about your options.

What if I want to give money to my grandchild but do not want to open a bank account?

You can give money directly to a parent to hold for the child, or you can give it to the child themselves if they are old enough. You can also set up a trust through a lawyer, which lets you control how and when the money is used. A custodial account is just one option, not the only one.

Can I add my grandchild to my own bank account instead?

You can add them as an authorized user on your account, but this is not the same as a custodial account. The money is still yours legally, and it could affect their financial aid or benefits. A custodial account is cleaner because the money belongs to the child from the start.

What happens if I die before my grandchild turns 18?

The account becomes part of your estate. Your will or state law determines who controls it next. If you want to make sure the money goes to the grandchild, name them as the beneficiary on the account (if the bank allows it) or mention the account in your will. Talk to a lawyer about how to handle this if you have a large amount set aside.

Can my grandchild access the account before they turn 18?

Only with your permission. You control the account until they reach the age of majority. Some banks let you set up a debit card for the child so they can make purchases, but you still control the account and can see all transactions. Ask your bank what options they offer.