Yes, you can open a bank account for a grandchild, but the rules depend on their age and what type of account you choose

If your grandchild is under 18, you cannot open an account in their name alone—you will need to be a custodian or joint account holder, which means you have legal control over the money until they reach the age of majority (usually 18, sometimes 21). If your grandchild is 18 or older, they can open their own account, though some banks allow you to be added as a co-owner if both of you consent.

The account type matters. A custodial account (also called a UTMA or UGMA account in most states) is set up specifically for a minor and transfers to them automatically when they turn 18 or 21. A joint account means you both own the money equally and either of you can withdraw it. A savings account for minors is a regular savings account where you are the custodian but the account belongs to the child. Each has different tax and control implications, and the right choice depends on whether you want the child to inherit the money at a set age or whether you need ongoing access to it.

Key Takeaways

  • You can open a custodial account for a grandchild under 18 in most states, and the money transfers to them automatically at age 18 or 21 depending on your state.
  • A joint account gives you both equal access to the money, but a custodial account is legally the child's property even though you control it until they come of age.
  • You will need the child's Social Security number, proof of your identity, and proof of your relationship (birth certificate or custody documents) to open most accounts.
  • Money in a custodial account counts as the child's income for tax purposes, which may affect financial aid and tax liability when they turn 18.
  • Some banks have minimum balance requirements or monthly fees for accounts, so compare options before opening.

Custodial accounts versus joint accounts: which one to choose

A custodial account is opened in the child's name with you as the custodian. You control the account and can deposit or withdraw money, but legally the money belongs to the grandchild. When they reach the age of majority in your state (18 or 21), the account becomes theirs and you lose control—they can withdraw all of it. This is useful if you want to set aside money for their future and may support it goes to them, not to other family members or creditors.

A joint account is opened in both your names, and either of you can withdraw money without permission. This gives you flexibility if you need to access the funds for the child's expenses, but it also means the grandchild can withdraw everything once they understand how to do so. Joint accounts do not automatically transfer ownership at any age—you both own the money equally for as long as the account exists.

If you are the legal guardian or have custody of the grandchild, a custodial account is usually the clearer choice because it protects the money as theirs while you manage it. If you are straightforward helping a grandchild save and want to keep things straightforward, a joint account may be easier. Talk to the bank about the tax treatment of each option—custodial accounts may trigger tax reporting requirements that joint accounts do not.

What documents and information you will need

To open any account for a minor grandchild, bring the child's Social Security number and proof of their identity (usually a birth certificate). You will also need to show your own identity—a driver's license, passport, or state ID card. Some banks ask for proof of your relationship to the child, such as a birth certificate showing you as the grandparent, custody papers, or a guardianship order.

If you are opening a custodial account, the bank will ask which state's law governs the account (usually the state where you live or where the child lives). This matters because the age at which the account transfers to the child varies by state—most use 18, but some use 21. The bank will explain this when you open the account.

Bring your current address and phone number. Some banks also ask for the child's address, which may be different from yours if they live with a parent. If you are not the child's parent or legal guardian, have a clear explanation of your relationship ready—banks are required to verify that you have the right to open an account on the child's behalf, and they may ask questions to confirm.

Tax implications of money in a custodial account

Money you deposit into a custodial account is a gift, not income, so it does not trigger income tax for you or the child. However, if the account earns interest or investment returns, that income belongs to the child and may be taxable. In 2024, the first $1,450 of unearned income (interest, dividends, capital gains) is not taxed if the child has no other income. Income above that amount is taxed at the child's rate, which is usually lower than yours.

When the child turns 18 and the account transfers to them, the money becomes part of their assets. This can affect their Free process for Federal Student Aid (FAFSA) if they are planning to attend college—student assets are counted more heavily than parent assets when calculating financial aid. If you are saving for a grandchild's education, talk to a tax professional about whether a custodial account or a different savings vehicle (such as a 529 plan) makes sense for your situation.

You cannot claim the child as a dependent on your taxes just because you opened an account for them. Tax dependency is determined by whether you provide more than half their financial support for the year, not by account ownership.

Age limits and what happens when the grandchild turns 18

Most banks allow you to open a custodial account for a child of any age, including infants. Some banks have a minimum age (such as newborn or age 1) but this is rare. There is no upper age limit for opening the account, but once the child reaches the age of majority in your state, the account must transfer to them automatically—you cannot keep control of it.

When the transfer happens, the child receives full access to the account and you lose all control. They can withdraw the money, close the account, or leave it open. You cannot prevent this transfer or require them to use the money for a specific purpose. If you want to set conditions on how the money is used (such as requiring it to go toward college), a custodial account is not the right tool—you would need a trust, which requires a lawyer to set up.

If the grandchild dies before the account transfers, the money goes to their estate (or to you if you are named as beneficiary, depending on the account terms). Check with the bank about their beneficiary rules when you open the account.

Banks and accounts that accept custodial accounts

Most major banks and credit unions offer custodial savings accounts, and many offer custodial checking accounts as well. Online banks such as Ally, Marcus, and Discover also offer custodial accounts, often with no monthly fees and higher interest rates on savings. Traditional banks such as Chase, Bank of America, and Wells Fargo offer custodial accounts but may have monthly maintenance fees unless you meet balance or deposit requirements.

Credit unions often have lower fees and may offer better rates, especially if you are a member. If you are not sure whether a specific bank offers custodial accounts, call or visit their website and search for "custodial account" or "minor account"—most banks have a dedicated page explaining their options.

Compare the interest rate on savings, any monthly fees, minimum balance requirements, and whether the bank allows you to add the grandchild as an authorized user (so they can use a debit card once they are old enough). Some banks offer accounts designed for teens that include financial education tools or limited spending controls.

If you do not have legal custody or guardianship

If you are not the child's legal guardian or custodian, you may still be able to open a custodial account, but the bank will ask questions. Most banks require that you have a legitimate reason to control the account—being a grandparent is usually enough, but the bank may ask for proof of your relationship and may contact the child's parent to confirm they consent.

If the child's parent objects to you opening an account, the bank will likely refuse. Banks are required to prevent financial abuse, and they take seriously any situation where someone might be opening an account without the child's parent's knowledge. If you want to save money for a grandchild but the parent objects, you can open a regular savings account in your own name and name the grandchild as a beneficiary in your will—the money will go to them after you die, but they will not have access to it while you are alive.

If you have legal custody or guardianship, bring those documents with you. They will make the process faster and clearer.

Frequently Asked Questions

Can I open a bank account for a grandchild without the parent's permission?

Most banks will ask for the parent's consent or at least will not open an account if the parent objects. If you are the legal guardian, you do not need the parent's permission. If you are not, the bank may contact the parent to confirm they agree. Opening an account without consent could be seen as financial abuse, and banks are trained to watch for this.

What happens to the money if the grandchild dies before turning 18?

The money goes to the child's estate, which is usually distributed according to their parent's will or state law. If you named yourself as a beneficiary on the account when you opened it, you may receive the money instead, depending on the bank's rules. Ask the bank about beneficiary options when you open the account.

Can I withdraw money from a custodial account for the grandchild's expenses?

Yes. As the custodian, you can withdraw money to pay for the child's food, housing, education, medical care, and other needs. You cannot withdraw it for your own expenses. If you take money out for yourself, you may owe taxes on it and could face legal consequences if the child or their parent challenges you.

Does opening a custodial account affect my grandchild's Social Security benefits or government programs?

It may. If the grandchild receives Supplemental Security Income (SSI) or Medicaid based on low income, money in a custodial account counts as their resource and could reduce or end their benefits. If the grandchild receives SSI, talk to a Social Security representative before opening an account, or consider a special needs trust instead.

Can I open a custodial account if the grandchild lives in a different state?

Yes. You can open an account in your state or the child's state—the bank will let you choose which state's law governs the account. This matters because the age at which the account transfers to the child varies by state. Choose the state that makes sense for your situation, and ask the bank to explain the difference.