Yes, grandparents can open a savings account for a grandchild, but the account structure depends on the child's age

A grandparent can open a savings account in a grandchild's name at most banks and credit unions. The account belongs to the child, not the grandparent, even though the grandparent set it up and may be the one depositing money. How you do this depends on whether the child is old enough to sign documents — typically age 18 — or whether they are younger and need a parent or guardian involved.

If your grandchild is under 18, you will need a parent or legal guardian to co-own the account with you or to authorize it. Banks require this because minors cannot legally sign contracts. If your grandchild is 18 or older, they can open the account themselves, though you can still help with the process and contribute money to it.

The money in the account belongs to your grandchild from the moment it is deposited. You cannot take it back or use it for your own expenses, even if you opened the account. This is an important distinction — it is a gift, not a loan to yourself.

Key Takeaways

  • For a grandchild under 18, a parent or legal guardian must be listed on the account along with you or must authorize the account.
  • For a grandchild 18 or older, they can open the account themselves, and you can contribute money without being on the account.
  • The money in the account is legally your grandchild's property once deposited, even if you opened it and added the funds.
  • Different account types — custodial accounts, UTMA accounts, or straightforward joint accounts — offer different tax and control features depending on your state and bank.
  • You will need the child's Social Security number, proof of identity for yourself, and proof of the parent's or guardian's identity to open the account.

Accounts for grandchildren under 18: custodial and UTMA accounts

If your grandchild is under 18, the most common structure is a custodial account. You act as the custodian — the adult responsible for managing the money — while the account is registered in the child's name. A parent or legal guardian typically needs to sign off on this arrangement, though some banks allow a grandparent to be the sole custodian if the parent consents.

Some states offer UTMA accounts (Uniform Transfers to Minors Act), which are a specific type of custodial account with tax advantages. Money in a UTMA account transfers automatically to the child when they reach the age of majority — usually 18 or 21, depending on your state. You do not need to go to court or file paperwork to transfer it; it happens by law. Ask your bank whether they offer UTMA accounts and what age the transfer happens in your state.

In a custodial account, you can withdraw money for the child's benefit — for school supplies, medical expenses, or other needs — but you cannot take the money for yourself. The child's parent or guardian may need to approve withdrawals, depending on the bank's rules and whether they are also on the account.

Accounts for grandchildren 18 and older: straightforward savings accounts

Once your grandchild turns 18, they can open a regular savings account in their own name without a parent or guardian involved. You do not need to be on the account at all. You can still deposit money into it if the child gives you permission and provides you with the account number, or you can transfer money electronically from your own account.

Some grandparents choose to open a joint account with an adult grandchild, which means both of you can deposit and withdraw money. This can be useful if you want to manage the account together, but it also means your grandchild can withdraw all the money without your permission. Make sure you trust the arrangement before you set it up.

A regular savings account has no special tax treatment, but it is simpler to manage than a custodial account. There are no restrictions on when the money can be withdrawn or what it can be used for once the grandchild reaches 18.

Documents and information you will need

To open any account for a grandchild, bring the child's Social Security number (or tax ID number if they do not have one). You will also need proof of the child's identity — usually a birth certificate for a minor, or a state ID or passport for someone 18 or older.

Bring your own photo ID and proof of address (a utility bill or bank statement dated within the last 60 days works at most banks). If a parent or guardian needs to be on the account or authorize it, bring their ID and proof of address as well. Some banks ask for a copy of the custody or guardianship documents if the grandparent is the legal guardian rather than a parent.

Call the bank or credit union ahead of time to ask what documents they specifically require. Different institutions have slightly different rules, and some may ask for additional paperwork if you are opening a custodial account.

Tax considerations for accounts in a grandchild's name

Money in a savings account earns interest, and that interest is taxable income to the account owner — your grandchild. The bank will send a form called a 1099-INT each year if the interest earned is above a certain threshold (usually $10). Your grandchild or their parent will need to report this on their tax return.

For a minor, the parent typically claims the child as a dependent on their own tax return, and the child's interest income may be taxed at the parent's rate or the child's rate depending on how much interest is earned. The rules are complex, so ask a tax professional or the IRS website (irs.gov) if you are concerned about the tax impact of a larger account.

UTMA accounts have a specific tax advantage: the first portion of the child's unearned income (interest) each year is not taxed at all, and the next portion is taxed at the child's rate rather than the parent's rate. This makes UTMA accounts attractive for larger amounts of money, but the advantage only applies if your state offers them and your bank supports them.

What happens to the account if you pass away

If you are the custodian of a custodial account and you pass away, the account does not automatically go to your estate. It belongs to your grandchild. However, the bank will need a new custodian to manage it until the child reaches the age of majority. You can name a successor custodian in your will — usually another family member — and the bank will recognize that person as the new manager of the account.

If you do not name a successor custodian in your will, the bank may freeze the account until a court appoints a guardian or the child reaches 18. To avoid this, write down who you want to take over as custodian and tell your family members. You can also mention it in your will or in a letter of instruction that your family can show to the bank.

For a joint account with an adult grandchild, the account passes to the surviving owner (your grandchild) automatically. You do not need to do anything special, but it is still a good idea to mention it in your will so your family understands what you intended.

Frequently Asked Questions

Do I need the parent's permission to open a custodial account for my grandchild?

Yes, in most cases. The parent or legal guardian should be informed and typically needs to sign consent. Some banks require the parent to be listed on the account as well. Call your bank first to ask their specific policy — it varies by institution.

Can I put money in the account without being on it?

Yes, once the account is open, anyone can deposit money into it if they have the account number. You do not need to be listed as a co-owner or custodian to add funds. This is a common way grandparents contribute to accounts they do not manage.

What happens to the money if my grandchild does not use it?

The money stays in the account and belongs to your grandchild. Once they turn 18 (or 21, depending on the account type and your state), they can use it for anything — college, a car, rent, or just to keep saving. You cannot take it back.

Is there a limit to how much I can put in a grandchild's account?

There is no limit on deposits to a regular savings account. However, very large gifts may have tax implications for you under federal gift tax rules. The IRS allows you to give a certain amount per person per year without filing a gift tax return. Consult a tax professional if you are planning to give a very large sum.

Can I open an account for a grandchild if I do not have custody?

Yes, but you will need the parent's or legal guardian's permission and involvement. You cannot open a custodial account unilaterally. If the parent refuses, you can still give money to the parent to deposit into an account they control, or you can open an account in your own name and transfer it to your grandchild when they turn 18.