Yes, a minor can be a beneficiary on a bank account, but the bank account itself must be owned and managed by an adult

A beneficiary is someone who receives money from an account after the account owner dies. Banks allow you to name a minor as a beneficiary on savings accounts, checking accounts, and other deposit products. The minor does not need to be present, does not need to sign anything, and does not need permission — you, as the account owner, make that choice when you open the account or update it later.

The key difference: the minor cannot own or control the account while you are alive. A parent or guardian must be the account owner and the one making deposits, withdrawals, and decisions. When you die, the bank transfers the money to the minor's name, but what happens next depends on the minor's age and what state you live in.

Key Takeaways

  • You can name a minor as a beneficiary on any bank account you own by filling out a beneficiary form when you open the account or by updating an existing account at any time.
  • The minor receives the money directly from the bank after you die, without the account going through probate court.
  • If the minor is under 18 when you die, most banks will hold the money in a blocked account until the minor reaches the age of majority in your state, usually 18 or 21.
  • Some states allow you to name a custodian in your will or trust to manage the money for the minor until they reach a certain age, which gives you more control than a straightforward beneficiary designation.
  • Naming a minor as a beneficiary does not affect their access to government benefits like SSI or Medicaid, but a large inheritance can disqualify them later.

How to name a minor as a beneficiary

Contact your bank and ask for a beneficiary designation form or POD form (payable-on-death). You fill it out with the minor's full legal name, date of birth, and Social Security number. Some banks let you do this online; others require you to visit a branch or mail the form in. There is no fee, and you can change or remove the beneficiary at any time while you are alive.

If you already have a bank account without a beneficiary named, you can add one now. Call the bank's customer service line or visit a branch and ask to update your beneficiary designation. Bring your account number and ID. The process usually takes a few minutes, though it may take a few business days for the change to show in the system.

You can name more than one beneficiary. If you name two minors, you can split the money equally, or you can specify a percentage for each one. Write these details clearly on the form so the bank knows exactly how to divide the account after you die.

What happens to the money when you die

When you pass away, the bank does not automatically transfer the money. The person handling your affairs (your executor, if you have a will, or a family member) must notify the bank and provide a death certificate. The bank will then release the money to the minor's name.

If the minor is 18 or older in your state, they can usually access the money right away. If they are younger, the bank will place the money in a blocked account or restricted account that the minor cannot touch until they reach the age of majority. In most states, that age is 18, but in some it is 21. The bank will tell you the rules for your state when you set up the beneficiary designation.

The money stays in the bank's name during this time, and the minor does not pay taxes on it unless it earns interest above a certain threshold (which varies by year). When the minor reaches the age set by your state, the bank releases the full balance to them with no further paperwork needed.

The difference between a beneficiary and a custodian account

A beneficiary designation is straightforward: you name someone to receive the money after you die, and the bank handles the transfer. You have no control over what happens to the money once the minor gets it. If you want more say in how the money is used — for example, if you want it to go toward college or to be held until the minor is 25 — you need a different tool.

A custodial account (also called an UTMA or UGMA account, depending on your state) is a bank account set up specifically for a minor. You, as the parent or guardian, are the custodian and control the account. The money is legally the minor's, but you decide how it is spent until they reach the age of majority (usually 18 or 21). At that point, they take full control.

You can also name a custodian in your will or trust to manage money left to a minor. This gives you the most control: you can specify that the custodian holds the money until the minor is 25, or that it be used only for education, or that it be divided into separate accounts. This requires a lawyer to set up, but it is worth it if you have a large amount to leave.

Tax and benefit concerns when naming a minor as beneficiary

Naming a minor as a beneficiary does not affect their current benefits. If the minor receives SSI (Supplemental Security Income) or Medicaid, they can still receive the inheritance without losing those benefits when ready. However, once the money is in their name and they reach the age of majority, it counts as their asset, and a large balance can disqualify them from means-tested benefits.

If the minor is disabled and relies on SSI or Medicaid, talk to a lawyer before naming them as a beneficiary. You may want to set up a special needs trust instead, which allows the money to be used for the minor's benefit without counting against their may be able to access. This is a more complex tool, but it protects their benefits while still providing for them.

The minor does not owe income tax on the inheritance itself. If the account earns interest while the money is blocked, that interest may be taxable, but the amount is usually small. The bank will send a tax form if interest exceeds a certain threshold.

What happens if the minor is very young when you die

If the minor is 5 years old when you die and you have named them as a beneficiary, the bank will hold the money in a blocked account until they reach the age of majority in your state. That could be 13 years or more. During that time, the money sits in the bank earning little or no interest, and the minor cannot access it even for emergencies.

This is why many parents choose to name a custodian instead. A custodian can use the money for the minor's needs — school, medical care, housing — while they are growing up. When the minor reaches the age you set (which can be older than the age of majority), they receive what is left.

If you do not name a custodian and the minor is very young, the court may appoint a guardian of the estate to manage the money. This requires a court process and can be slow and expensive. Naming a custodian in your will avoids this.

Naming a minor as beneficiary versus leaving money in a will

If you name a minor as a beneficiary on a bank account, the money goes directly to them and does not go through probate court. This is faster — usually a few weeks — and cheaper, because there are no court fees or lawyer bills.

If you leave money to a minor in your will, it has to go through probate, which can take months or years depending on your state and how complicated your estate is. The court will appoint a guardian of the estate to manage the money until the minor reaches the age of majority. This costs more and takes longer, but it gives the court a chance to oversee how the money is used.

For most people, naming a minor as a beneficiary on a bank account is the simpler choice. For larger amounts or if you want more control over how the money is used, a will or trust is better.

Frequently Asked Questions

Can a minor open a bank account in their own name?

No, a minor cannot open a bank account alone. A parent or guardian must open the account and be the owner. The minor can be added as an authorized user on some accounts, which means they can make deposits and withdrawals, but the parent remains the owner and is responsible for the account.

What if I name a minor as a beneficiary and then have a child?

You can change your beneficiary at any time. Contact your bank and update the form to add the new child or to change how the money is split. If you do not update it, the money will go to whoever you named originally, and your new child will not receive anything from that account.

Can I name a minor who is not my child as a beneficiary?

Yes, you can name any minor as a beneficiary — a grandchild, niece, nephew, or friend's child. The bank does not require you to be related. However, if the minor is very young and you are not their parent or guardian, talk to their parents first to make sure they are comfortable with this arrangement.

What if the minor dies before I do?

If the minor dies before you, the beneficiary designation becomes void, and the money stays in your account. You should update your beneficiary form to name someone else or remove the designation. If you do not update it and you die without naming a new beneficiary, the money will go through probate and be distributed according to your will or your state's intestacy laws.

Does naming a minor as a beneficiary affect their credit?

No, naming a minor as a beneficiary does not affect their credit score. The money is not a loan, and the minor is not borrowing anything. When they receive the money and reach the age of majority, it will not show up on their credit report unless they use it to open a credit account.