What you need to open an account for a minor
You can open a savings account for your nephew, but the account will be a custodial account — one where you (the adult) control the money until he reaches the age of majority, usually 18 or 21 depending on your state. The bank will require two things: your identification and his Social Security number or Individual Taxpayer Identification Number (ITIN).
Your nephew does not need to be present to open the account, though some banks ask you to bring him in later to sign paperwork or set up a debit card. Call ahead to ask what the bank requires before you visit, because policies vary between institutions.
The account will be registered in both your names — typically as "[Your Name], custodian for [Nephew's Name]" — so the bank knows you are managing it on his behalf, not as your own money. This matters for tax purposes and for what happens to the account when he turns 18.
Key Takeaways
- You will need your own government-issued ID and your nephew's Social Security number or ITIN to open a custodial account.
- The account will be registered in both your names, with you listed as the custodian, and the bank will send tax documents in your name.
- Most banks allow you to open the account without your nephew present, though some require him to sign documents or set up a debit card later.
- When your nephew turns 18 or 21 (depending on your state), the account automatically transfers to his control and you lose the ability to manage it.
- Interest earned in a custodial account may be taxable, and the first portion of earnings each year is usually tax-free up to a limit set by federal law.
Which documents to bring to the bank
Bring your government-issued photo ID — a driver's license, passport, or state ID card. The bank will photocopy it or scan it into their system. You will also need your nephew's Social Security number; if he does not have one yet, you can request one from the Social Security Administration before opening the account, or some banks will let you open the account and add the number later.
If your nephew is old enough to have a birth certificate on file, bring that too — some banks ask for it as proof of his age and identity. If you do not have it, the bank can usually proceed without it, but calling ahead saves a trip back.
Bring a small amount of money to deposit. Most banks require a minimum opening deposit, which ranges from $0 to $100 depending on the institution. Some online banks have no minimum; others require $25 or more. Ask when you call.
How custodial accounts work once they are open
Once the account is open, you control all the money and all the decisions. You can deposit money whenever you want, withdraw it, and move it between accounts. Your nephew cannot touch the account until he reaches the age of majority in your state — usually 18, but sometimes 19, 20, or 21.
When your nephew turns 18 or 21, the account automatically transfers to his full control. You will no longer be able to manage it, withdraw from it, or see the balance without his permission. This is called reaching the age of majority, and it happens by law, not by choice. Plan ahead if you want to discuss the account with him before that date.
Some banks offer debit cards for custodial accounts, which let your nephew use the money at stores or ATMs even though you still control the account. Whether to give him a card is your decision — you can set spending limits or turn it off if needed. Ask the bank what controls are available.
Tax reporting for money in a custodial account
Interest earned in the account is reported to the IRS using your nephew's Social Security number, not yours. The bank will send a form called a 1099-INT (or 1099-OID for certain types of accounts) to both you and the IRS each January, showing how much interest was earned.
The first $1,250 of interest earned in a year (this amount changes annually) is usually not taxable. Interest above that amount may be taxable at your nephew's tax rate, which is often lower than yours. If your nephew has no other income, you may not owe tax on the interest at all. A tax professional can tell you for certain based on your family's situation.
Keep the 1099-INT form when it arrives — you will need it if you file taxes or if your nephew files taxes later. The bank keeps a copy too, so if you lose yours, you can request another one.
Different types of banks and what they offer
You can open a custodial savings account at a traditional bank, a credit union, or an online bank. Traditional banks have physical branches where you can walk in and speak to someone. Credit unions are member-owned and often offer lower fees, but you have to be a member (sometimes by living in a certain area or working for a certain employer). Online banks have no branches but often pay higher interest rates because they have lower costs.
For a child's first account, a traditional bank or credit union is often simpler because you can ask questions in person and the staff are used to helping families. Online banks work well if you are comfortable doing everything by phone, email, or their website.
Interest rates vary widely — some accounts pay almost nothing, while others pay 4% or 5% annually (rates change constantly, so check current rates before deciding). A higher rate means your nephew's money grows faster, which is why comparing banks before opening an account is worth the time.
What happens when your nephew turns 18
On the date your nephew reaches the age of majority in your state, the account legally becomes his. You will lose access to it. The bank may ask him to come in and sign new paperwork, or they may handle the transition automatically. Either way, you should tell your nephew about the account before this happens so he knows it exists and knows how to use it.
If you want to discuss how he should manage the money, or if you want to teach him about saving before he takes over, have that conversation while you still have time. Some families use the transition as a chance to talk about financial goals.
If your nephew is not ready to manage money on his own, you can close the account before he turns 18 and give him the money in person, or you can leave it open and let him take over. The choice is yours while you are the custodian.
Frequently Asked Questions
Can I open a savings account for my nephew if I am not his parent?
Yes. Any adult can open a custodial account for any minor. You do not have to be a parent or legal guardian. The bank only requires your ID and the child's Social Security number. Some banks may ask why you are opening the account, but there is no legal restriction on who can be a custodian.
What if my nephew already has a Social Security number but I do not know it?
Ask his parents for it. If they do not have it written down, they can call the Social Security Administration at 1-800-772-1213 or visit ssa.gov to request a replacement card. You will need the number before the bank can open the account, though some banks will let you provide it later.
Can I add money to the account after it is open?
Yes. You can deposit money whenever you want, in any amount. There is usually no limit on how much you can add. Just bring cash or a check to the bank, or use their online banking system if they offer it. Some banks also let you set up automatic transfers from another account.
What if I need to withdraw money from the account before my nephew turns 18?
You can withdraw it anytime — it is your decision as the custodian. However, the money is legally held for your nephew's benefit, so withdrawing it for your own use is not the intended purpose. If you think you might need the money back, consider whether a custodial account is the right choice, or deposit only what you are certain you can leave for him.
Do different states have different rules for custodial accounts?
Yes. The age of majority ranges from 18 to 21 depending on where you live, and some states have slightly different rules about how the account transfers. Ask your bank what the rules are in your state, or call your state's banking regulator if you have questions.