Yes, you can open a savings account for your grandson, but the account structure depends on his age

You can open a savings account in your grandson's name at most banks and credit unions. If he is under 18, the account will be a custodial account — meaning you or another adult acts as the custodian and manage the money until he reaches the age of majority (usually 18 or 21, depending on your state). You have legal control of the account during this time, but the money belongs to him.

If your grandson is 18 or older, he can open his own account without you. You can still contribute money to it as a gift, but he will own and control the account from the start. Some banks allow you to add him as an authorized user on your own savings account instead, though this is less common for savings than for checking accounts.

The specific rules and account options vary by bank and by state, so it is worth calling ahead to ask what they offer for minors before you visit.

Key Takeaways

  • A custodial savings account lets you open an account in your grandson's name and manage it until he reaches adulthood, usually 18 or 21.
  • You will need your grandson's Social Security number and proof of his identity, plus your own ID and proof of address, to open the account.
  • Most banks and credit unions offer custodial accounts, but the features and minimum balances vary — call ahead to compare.
  • When your grandson reaches the age of majority set by your state, the account automatically transfers to his control, and you lose access.
  • Money you put into a custodial account is a gift to your grandson and may affect his financial aid for college, though it usually does not affect yours.

What documents you will need to bring

To open a custodial account, bring your grandson's birth certificate or passport (to prove his identity and age) and his Social Security number. If you do not have his Social Security number, you can ask his parents for it, or the bank can sometimes help you explore for one during the account opening.

You will also need to bring your own government-issued photo ID (a driver's license or passport) and proof of your current address — a utility bill, lease, or recent bank statement usually works. Some banks ask for a second form of ID as well. Call the bank ahead of time to ask what they specifically need, since requirements vary.

If you are not the parent or legal guardian, bring a letter from the parent or guardian giving you permission to open the account. This protects both you and the bank.

How custodial accounts work once they are open

As the custodian, you can deposit money, withdraw money, and manage the account however you choose while your grandson is a minor. You can set up automatic transfers from your own account, deposit checks in his name, or add cash at the bank. The money earns interest (though the rate is usually small), and you receive statements showing all activity.

Your grandson can see the account and learn how it works, but he cannot withdraw money or make decisions about it without your permission. This makes a custodial account a good teaching tool — you can show him how savings grow and involve him in decisions about the money as he gets older.

When he reaches the age of majority in your state (usually 18, sometimes 21), the account automatically becomes his to control. You will no longer have access, and he can withdraw all the money or close the account. This is why it is important to talk with him about the account and your hopes for it before that transition happens.

Tax and financial aid considerations

Money in a custodial account belongs to your grandson, not to you, so it is treated as his asset for tax and financial aid purposes. If the account earns interest or investment income above a certain threshold (which changes each year), your grandson may owe taxes on that income. The bank will send a tax form (usually a 1099) if interest exceeds the threshold, and his parents will need to report it on their tax return.

For college financial aid, money in a custodial account counts as your grandson's asset, which can reduce the amount of aid he is offered. Money in a parent's account counts differently and usually has less impact on aid. If college financial aid is a concern, talk with a tax professional or financial aid advisor before opening the account — there may be other ways to save that work better for your situation.

For Supplemental Security Income (SSI) or other means-tested benefits your grandson may receive, a custodial account could affect his may be able to access. If he receives any government benefits based on income or assets, check with the program before opening the account.

Choosing between a bank and a credit union

Both banks and credit unions offer custodial savings accounts. Credit unions are member-owned nonprofits, while banks are for-profit institutions. For a straightforward savings account, the main differences are the interest rate offered, any monthly fees, and the minimum balance required.

Credit unions sometimes offer slightly higher interest rates and lower fees, but you have to be a member to open an account. Membership usually requires living or working in a certain area, belonging to a certain employer or organization, or being related to a current member. Banks are open to anyone and have more branch locations in most areas.

Compare a few options in your area by calling or visiting their websites. Ask about the interest rate, any monthly maintenance fees, the minimum balance to open, and whether they offer online access so you can manage the account from home.

What happens if your grandson's parents object

If you are not the parent or legal guardian, the parents have the right to know about and consent to the account. Some banks require written permission from a parent before opening a custodial account if you are a grandparent. Even if the bank does not require it, it is important to talk with the parents first — they may have concerns about how the money will be used or managed.

If the parents object after the account is open, they can petition a court to close it or transfer the funds. This is rare, but it is another reason to have the conversation upfront. Frame it as a gift and a way to teach your grandson about saving, and explain how you plan to manage the account.

Alternatives if a custodial account does not fit your situation

If you want to save for your grandson but a custodial account does not work for your situation, there are other options. You can keep the money in your own savings account and give it to him later as a gift. You can also look into a 529 college savings plan, which is designed specifically for education expenses and has different tax and financial aid treatment than a regular savings account.

Some grandparents set up a trust instead of a custodial account, which gives more control over how and when the money is used. A trust costs more to set up (usually a few hundred dollars with a lawyer) but may be worth it if you have a large amount to save or specific wishes about how the money should be spent.

Talk with your grandson's parents about what makes sense for your family. They may have their own savings plan in place, or they may welcome your help.

Frequently Asked Questions

Do I need the parents' permission to open a custodial account for my grandson?

Most banks require written permission from a parent or legal guardian if you are a grandparent. Even if the bank does not require it, it is a good idea to ask first. The parents may have concerns or may already have a savings plan in place.

What happens to the account when my grandson turns 18?

The account automatically becomes his to control. You will no longer have access, and he can withdraw the money, close the account, or leave it open. It is a good idea to talk with him about the account before this happens so he understands what it is and why you opened it.

Will the money in the account affect his college financial aid?

Yes, money in a custodial account counts as his asset for financial aid purposes and can reduce the amount of aid offered. Money in a parent's account usually has less impact. If college aid is a concern, talk with a financial aid advisor before opening the account.

Can I withdraw money from the account for my own use?

Legally, no. The money belongs to your grandson, not to you. Withdrawing it for your own use is considered a breach of your duty as custodian and could have legal consequences. The account is meant to be for his benefit only.

What if my grandson's parents want to close the account?

The parents can petition a court to close the account or transfer the funds, though this is uncommon. It is another reason to have a clear conversation with them before opening the account about your intentions and how you will manage the money.