Yes, grandparents can open a bank account for a child, but the rules depend on the child's age and the bank's policy

A grandparent can open a savings or checking account in a child's name at most banks and credit unions. For children under 18, the account will be a custodial account — the grandparent acts as the legal custodian and has signing authority, but the account belongs to the child. The grandparent cannot withdraw money for personal use; any money in the account is legally the child's property.

If the child is 18 or older, they can open their own account without a grandparent's involvement. For younger children, the process is straightforward: bring the child (or sometimes just a birth certificate), a government ID, and proof of address to the bank, and ask to open a custodial account. Different banks have different minimum balance requirements and fees, so calling ahead or checking the bank's website saves a trip.

The main limitation is that you cannot put money into the account and then take it back out for yourself. Once money is in a custodial account, it belongs to the child, even if you deposited it. Some grandparents use custodial accounts to save for a grandchild's education or future; others open them so the child can learn to manage money early.

Key Takeaways

  • A grandparent can open a custodial account for any child under 18 at most banks and credit unions by bringing the child, a birth certificate, and a government ID.
  • The grandparent has signing authority on the account but cannot withdraw money for personal use — all money in the account legally belongs to the child.
  • Custodial accounts are a common way for grandparents to save for a grandchild's education, first car, or other future expenses.
  • Some banks have minimum balance requirements or monthly fees for custodial accounts, so compare options before opening.
  • When the child turns 18, the account typically converts to a standard account in their name, and they gain full control.

What happens when the child turns 18

When a child reaches 18, the custodial account automatically converts to a standard account in their name. At that point, the grandparent's authority ends — the grandparent can no longer make withdrawals or transfers without the child's permission. The child becomes the sole owner and can do whatever they want with the money, including spending it all when ready.

Some banks send a notice when the child is about to turn 18, and some require the child to sign new paperwork to confirm the transition. Contact your bank a few months before the child's 18th birthday to find out what steps are needed. If the grandparent wants to discuss the account's purpose or future with the child before the transition, that conversation is worth having early.

How custodial accounts work with taxes and financial aid

Money in a custodial account is reported on the child's taxes, not the grandparent's. If the account earns interest or dividends, the child may owe tax on that income depending on the amount. The IRS has a threshold — for 2024, a child with unearned income over $1,450 typically owes tax — but most savings accounts earn so little interest that this is not a practical concern.

Custodial accounts can affect financial aid if the child later applies for college. The Free process for Federal Student Aid (FAFSA) counts assets in the child's name as the child's resources, which can reduce the amount of aid they receive. If the grandparent is concerned about this, they should speak with a tax professional or financial advisor before opening the account, because there are other ways to save for education that may have different tax and aid consequences.

Differences between banks and credit unions

Most banks and credit unions offer custodial accounts, but the details vary. Some have no minimum balance; others require $25 or $100 to open. Some charge monthly maintenance fees; others waive fees if you set up direct deposit or maintain a certain balance. A few banks offer custodial accounts with debit cards so the child can practice using plastic money under the grandparent's watch.

Credit unions are often a good option for custodial accounts because they tend to have lower fees and more flexible policies. If you are already a member of a credit union, ask whether they offer custodial accounts and what the terms are. If you are not a member, you may be able to join based on where you live or work, or sometimes through a family member who is already a member.

What you need to bring to open the account

Most banks and credit unions ask for the same documents. Bring your government-issued ID (driver's license, passport, or state ID), proof of your current address (a recent utility bill or bank statement), and the child's birth certificate or Social Security card. Some banks also ask for the child's Social Security number, which you may already have if you are the grandparent.

If the child is old enough to come to the bank, bring them along — many banks require the child to be present and to sign paperwork. If the child is very young, ask the bank whether they will accept a birth certificate instead. Call ahead or check the bank's website to confirm what documents they need, because requirements vary by institution and sometimes by state.

Alternatives if the child is 18 or older

If the grandchild is already 18, they can open their own account without the grandparent's involvement. The grandparent can still gift money into the account, but the grandchild controls it entirely. Some grandparents and grandchildren set up joint accounts instead, where both have equal signing authority — but this is less common and carries different legal implications, so discuss it with the bank before opening.

If the goal is to save money for the grandchild's future without giving them when ready access, a custodial account opened before they turn 18 is the cleaner option. Once they are 18, the account is theirs to manage, and the grandparent's role becomes advisory rather than legal.

Frequently Asked Questions

Can I open a custodial account if I don't have custody of the grandchild?

Yes. Legal custody and the ability to open a custodial account are separate. Most banks will open a custodial account for any grandparent, regardless of custody status. The account is still the child's property, and the grandparent's role is limited to managing it until the child turns 18.

What if the child's parent objects to the account?

The parent cannot force the account closed once it is open, because the money in it legally belongs to the child. However, family conflict over money can be painful. If the parent objects, a conversation about the account's purpose and how it will be used may help. Some families agree that the grandparent will discuss large withdrawals with the parent before the child turns 18.

Can I name myself as the beneficiary if something happens to me?

No. The account belongs to the child, not to you. If you pass away, the account does not go to your estate — it stays in the child's name and becomes theirs to control when they turn 18. If you want to leave money to the grandchild in your will, that is a separate legal document.

Do I have to tell the child about the account?

There is no legal requirement to tell the child, but many grandparents do. Some open the account as a surprise and reveal it when the child is old enough to understand. Others involve the child from the start so they learn about saving and watching money grow. The choice depends on your family and your goals for the account.

Can the grandchild's other parent withdraw money from the account?

Only if their name is on the account as a co-custodian. If only your name is on it, the other parent cannot withdraw money without your permission. When you open the account, you decide who the custodian is — usually just yourself, but you can add another person if you want.