Yes, you can open a bank account for your grandchild, but the method depends on their age

If your grandchild is under 18, you cannot open an account in their name alone—banks require the account holder to be at least 18. What you can do instead is open a custodial account (also called a minor account or UTMA/UGMA account) in their name with yourself or another adult as the custodian. You control the account until they reach the age of majority, which is 18 in most states and 21 in a few others.

If your grandchild is 18 or older, they can open their own account. You can help them do it, but the account will be in their name only, and they will have full control from day one.

The main reason to open an account now is to start building their financial habits early, set aside money for their future, or manage funds you want to give them without handing over cash. A custodial account also keeps the money separate from your own assets, which matters for estate planning and for your grandchild's financial independence.

Key Takeaways

  • Custodial accounts let you open a bank account for a minor grandchild in their name with you as the custodian, and you control it until they turn 18 or 21.
  • You will need the grandchild's Social Security number, birth certificate, and proof of your identity and address to open the account.
  • Most banks allow custodial accounts, but rules on who can be the custodian, minimum balances, and fees vary by bank.
  • When your grandchild reaches the age of majority, the account automatically transfers to their control—you cannot keep it after that point.
  • If you want to leave money to your grandchild in your will, a custodial account is separate from your estate and does not require probate.

What documents you need to open a custodial account

Bring your grandchild's Social Security number and birth certificate. The bank will verify the Social Security number to set up the account and for tax reporting—any interest the account earns will be reported on your grandchild's tax return, not yours.

You will also need to show your own government-issued ID (driver's license or passport) and proof of your current address, such as a utility bill or bank statement dated within the last 60 days. Some banks accept a lease or mortgage statement instead.

If you do not have your grandchild's birth certificate on hand, ask the parent or guardian for a copy. If you do not have their Social Security number, you can request it from the Social Security Administration, but the parent or guardian will need to do this—you cannot request it yourself unless you have legal custody.

Types of custodial accounts and how they work

The two main types are UTMA accounts (Uniform Transfers to Minors Act) and UGMA accounts (Uniform Gifts to Minors Act). UTMA is newer and available in all 50 states; UGMA is older and not available in South Carolina. For a basic savings account, the difference rarely matters—both let you deposit money and let it grow until your grandchild turns 18 or 21.

Some banks also offer 529 college savings plans as custodial accounts, which have tax advantages if the money is used for education. These are separate from regular savings accounts and have their own rules about withdrawals and penalties.

A regular custodial savings account is the simplest option if you just want to save money for your grandchild without a specific purpose. You deposit funds, the account earns interest (usually very small at most banks), and your grandchild can withdraw it once they turn 18 or 21. You cannot take the money back—once it is in a custodial account, it legally belongs to your grandchild, even though you control it while they are a minor.

Who can be the custodian and what that means

You can be the custodian, or you can name another adult—a parent, another grandparent, or a trusted friend. Only one custodian can be named on the account. If you die while you are the custodian, the account does not close; the bank will require the grandchild's parent or guardian to take over as custodian until your grandchild turns 18 or 21.

As custodian, you can deposit money, withdraw money to pay for your grandchild's needs (food, school, medical care, activities), and manage the account. You cannot use the money for yourself or for things that are not your grandchild's responsibility—for example, you cannot withdraw it to pay your own bills. If you do, you could face legal liability.

You also cannot change your mind and move the money to a different account in your name. Once money is in a custodial account, it stays there until your grandchild reaches the age of majority.

Minimum balances, fees, and which banks to use

Most major banks (Chase, Bank of America, Wells Fargo, Citibank) and many credit unions offer custodial accounts. Minimum opening balances range from $0 to $100 depending on the bank. Monthly maintenance fees are usually $0 to $15, though some banks waive fees if you set up direct deposit or keep a minimum balance.

Online banks like Ally, Marcus, and Discover often have no monthly fees and no minimum balance, which makes them cheaper to maintain over time. The trade-off is that you cannot walk into a branch if you need help—everything is done online or by phone.

Interest rates on savings accounts are very low at most banks (often under 0.5% per year), so the money will grow slowly. If you want faster growth, a custodial investment account (brokerage account) lets you invest in stocks or funds, but that comes with more risk and is more complex to manage.

What happens when your grandchild turns 18 or 21

The account automatically transfers to your grandchild's full control on their 18th or 21st birthday, depending on your state. You lose all control at that moment—you cannot withdraw money, you cannot see the balance, and you cannot tell them how to spend it. This is a hard cutoff; there is no way to extend your control or make it conditional.

Your grandchild will receive notice from the bank before or on their birthday. They can then use the account however they want: withdraw it all, leave it alone, or add more money to it. If you want to have a conversation about how you hope they will use it, do that before their birthday.

If you are concerned about your grandchild's financial judgment at 18, a custodial account is not the right tool. You would need a trust instead, which is more expensive to set up but gives you more control over when and how they can access the money.

Tax reporting and what your grandchild owes

Interest earned in a custodial account is reported on your grandchild's tax return, not yours. If the account earns less than $1,300 in a year (the threshold changes annually), no federal income tax is owed. If it earns more, your grandchild may owe tax on the amount above that threshold.

You do not claim the account as an asset on your own tax return, and it does not count toward your annual gift tax limit. This is one advantage of custodial accounts over simply giving your grandchild cash or putting money in your own account for them.

When your grandchild turns 18 or 21 and takes control of the account, they will receive tax documents (a 1099 form if there was interest) and will be responsible for reporting it on their own tax return from that point forward.

Frequently Asked Questions

Can I open a custodial account if I do not have legal custody of my grandchild?

Yes. Legal custody and being the custodian of a bank account are separate things. You can open a custodial account even if the grandchild's parent has full custody. However, if the parent objects, some banks may require written consent from the parent before opening the account.

What if I want to leave money to my grandchild in my will instead?

A custodial account is separate from your will and does not go through probate. Money in the account goes directly to your grandchild when you die, regardless of what your will says. If you want the money to be part of your estate and distributed according to your will, do not use a custodial account—keep the money in your own account and name your grandchild in your will.

Can I withdraw money from the custodial account if I need it?

Legally, no. The money belongs to your grandchild, and you can only withdraw it for their benefit. If you withdraw it for yourself, you could face legal consequences. If you might need access to the money later, a custodial account is not the right choice.

What if my grandchild's parent wants to close the account?

If you are the custodian, the parent cannot close it without your permission. However, if you die or become unable to manage it, the parent may be able to take over as custodian. The rules vary by state and by bank, so ask your bank what happens if the custodian dies or becomes incapacitated.

Can I open more than one custodial account for the same grandchild?

Yes. You can open multiple accounts at different banks, or you and another family member can each open a custodial account for the same grandchild. Each account is separate and will transfer to your grandchild's control on their 18th or 21st birthday.