How to Open a Savings Account for an Infant Grandchild (2024)

FAQs

How to Open a Savings Account for an Infant Grandchild? ›

Opening a financial account requires personal information. To open one on your grandchild's behalf, you will need their full name, birthday, complete address, phone number and Social Security number. Plus, you will submit the same details regarding yourself or another adult, like a parent, who will oversee the account.

You can open a savings account for a grandchild today

Opening a savings account for a grandchild is a generous, forward-thinking thing to do. “If you can afford it, it's a great way to set up your grandchild for success,” Bessette says. Financial planning for a baby isn't easy or cheap.

Custodial accounts (UGMA/UTMA)

Custodial accounts can be opened at most large banks and brokerages. The custodian who manages the account can withdraw funds for expenses benefiting the child, giving these accounts a high degree of flexibility.

While grandparents can pay into accounts such as a junior ISA or junior SIPP, you usually have to be a parent or legal guardian to open one. The exception could be a junior investment account.

To open a savings account for your child, you typically need to provide information including your child's name, birthdate and Social Security number. You'll also likely need to provide your own Social Security number, driver's license number, address, phone number and email address.

A youth account, also known as a children's savings account or kids' account, is one of the best savings accounts for a grandchild. Typically, these accounts are specifically tailored to meet the financial needs and goals of young individuals.

Children's savings account

Children's savings accounts can be opened in your grandchild's name and anyone can make deposits. Most banks and credit unions offer these. Look for accounts that don't require high minimum balances or charge fees for low balances.

Coverdell Education Savings Accounts

Like a 529 plan, a Coverdell education savings account (ESA) allows you to invest money, use it for qualifying college or K-12 expenses and pay no taxes on gains. You can open a Coverdell ESA at brokerages and other financial institutions for minor grandchildren.

A custodial Roth IRA for a child or grandchild becomes their own when they reach the legal age of majority in their state (18 or 21). This means they have full access to the assets and can make a withdrawal if they choose.

How much money can you give to your grandchildren tax free? ›

Annual gifting exclusion limits

This is known as the annual exclusion. For 2023, the annual limit per recipient is $17,000 and for 2024 it's $18,000. In other words, you can give up to annual limit per grandchild without worrying about tax implications or filing a gift tax return.

Yes, you can open a Roth IRA for someone else.

Parents, and even grandparents or other relatives in some cases, can open a bank account for a child. This could take the form of a custodial account with the parent managing and having legal authority over the child's money. Or, parents could open a joint account with their child that is co-owned.

Most banks require a child to be at least seven before they can open an account for themselves, though they do all differ, so it's worth checking the specifics. Under-sevens require a parent, guardian or grandparent to set up an account and act as signatory. This method can also be selected for older children.

Minor children by law can't open a savings account. They need a parent or guardian to set up a custodial or joint account. A custodial account is the property of the child, but managed by the parent until the child turns 18.

Conditions for holding your account

Both the adult and the child must be living at the same address (for some or all of the time) at the time of account opening. The child must be aged between 0 and 15 years when the account is opened, but the account can be held until the child is 18 years and six months.

Yes, you can open a bank account for someone else. However, they will usually have to be aware and participate in the account opening process. But, before you open an account on someone else's behalf, make sure you understand the financial implication of this decision, such as forgoing your privacy.

You must have the necessary identification for both yourself and your grandchild (birth certificate, Social Security number). Some banks may require permission or presence of the grandchild's parent or legal guardian.

A Junior ISA is a tax-efficient savings and investment account designed for children. It's a way for parents, family members and legal guardians to save long term on behalf of a child. They're sometimes referred to as children's ISAs.

Yes, you can open a Roth IRA for someone else.