Yes, grandparents can open a bank account for a grandchild, but the rules depend on the child's age and your relationship to them

If the grandchild is under 18, you can open a custodial account (also called a minor account) at most banks and credit unions. The account belongs to the child, but you control it until they reach the age of majority—usually 18 or 21, depending on your state and the account type. You will need the child's Social Security number, a government ID for yourself, and proof of your relationship to the child (birth certificate or custody documents work).

If you want to open an account without being the legal custodian—for example, if the parents are alive and managing the account—you can ask the parents to open it and add you as an authorized user. This lets you deposit money and make withdrawals, but the parents retain control. A third option is to open an account in your own name and transfer money to the child later, though this creates tax and inheritance complications.

The fastest route is to visit a bank or credit union where you already have an account and ask about their minor account options. Many institutions offer them with no minimum balance or low fees for children under 18.

Key Takeaways

  • A custodial account puts the child's name on the account and gives you legal control until they turn 18 or 21, depending on your state.
  • You will need the child's Social Security number, your government ID, and proof of your relationship to open a custodial account.
  • If the parents are alive, ask them to open the account and add you as an authorized user instead—this keeps them in control while letting you deposit and withdraw.
  • Most banks and credit unions offer minor accounts with no minimum balance, though some charge a small monthly fee.
  • Money in a custodial account belongs to the child and may affect their financial aid or tax liability when they turn 18.

What you need to bring to open a custodial account

Bring your government-issued ID (driver's license or passport), the child's Social Security number, and a document showing your relationship to the grandchild. A birth certificate works best. Some banks also ask for proof of address, such as a recent utility bill or lease in your name.

If you do not have the child's Social Security number, you can ask the parents for it. If the child does not have one yet, you can apply for one at your local Social Security office before opening the account, though some banks will let you complete the account setup and add the number later.

Call the bank or credit union ahead of time to confirm what documents they need. Requirements vary by institution and by state.

How a custodial account works once it is open

You can deposit money, withdraw money, and manage the account as if it were your own. The child's name appears on the account, but they cannot access it or make decisions about it until they reach the age of majority. At that point, the account automatically transfers to their full control—you lose access.

Some banks let you set up automatic transfers or recurring deposits, which makes it easy to add money on a regular schedule. You can also set up alerts if the balance drops below a certain amount.

The account earns interest (usually very small at most banks), and that interest counts as the child's income for tax purposes. If the child has other income, you or the parents may need to file a tax return for them, depending on how much they earned that year.

The difference between custodial accounts and authorized user accounts

In a custodial account, the child is the owner and you are the custodian. The account is legally theirs, and when they turn 18 or 21, it becomes entirely theirs. You have no say in how they use it after that point.

In an authorized user account, the parents remain the owners and you are added as someone who can access it. You can deposit and withdraw, but the parents can remove you at any time and can set limits on what you can do. When the child turns 18, the parents decide whether to keep you on the account or remove you.

Authorized user accounts are simpler if the parents are involved and trust you. Custodial accounts are better if you want to set aside money specifically for the grandchild and want legal clarity about who controls it.

Tax and financial aid consequences of money in a custodial account

Money in a custodial account is considered the child's asset, not yours. When the child turns 18 and applies for college financial aid, the account balance will be counted as their resource. This can reduce the amount of need-based financial aid they receive—typically by about 20 percent of the account balance per year.

If you are concerned about this, talk to the parents about whether a custodial account is the right choice. Some families use a custodial account for smaller amounts and keep larger sums in the grandparent's name instead, though that creates complications if you pass away.

The interest earned in the account is taxable income to the child. If the child has no other income and the interest is small, no tax return is required. If the child has other income or the interest is substantial, the parents may need to file a return for them.

What happens when the grandchild turns 18

The account automatically transfers to the child's full control. You will no longer have access to it, and you cannot withdraw money or make decisions about it. The child can close the account, move the money, or spend it however they want.

Some states let you choose between age 18 and age 21 for when control transfers. Ask the bank which ages are available in your state when you open the account, and choose the one that makes sense for your family.

If you are worried about the child spending the money unwisely, a custodial account may not be the right tool. A trust set up by a lawyer gives you more control over when and how the money is used, though it costs more to set up.

Alternatives if you cannot open a custodial account

If the parents do not want you to open a custodial account, ask them to open one themselves and add you as an authorized user. This gives you access without requiring you to be the legal custodian.

If you want to set aside money for the grandchild but do not want to open a joint account, you can open a savings account in your own name and leave it to the child in your will. This keeps the money separate and gives you full control during your lifetime, but it does not help the child access the money before you pass away.

A revocable living trust is another option if you want to leave money to the grandchild and avoid probate. A lawyer can set this up, and it costs more than a simple will but gives you more control over how and when the money is used.

Frequently Asked Questions

Do I need the parents' permission to open a custodial account for my grandchild?

Most banks do not require written permission from the parents, but it is a good idea to tell them what you are doing. If the parents object, they may be able to challenge the account or request that the bank close it. Starting with their agreement avoids conflict later.

What if the grandchild's parents are divorced or one parent is not involved?

You can still open a custodial account with just the child's Social Security number and your ID. However, if there is a custody dispute or a court order restricting access to the child, the bank may ask for documentation. If you are unsure, call the bank and describe the situation before you visit.

Can I open a custodial account if I am not a U.S. citizen?

Most banks require you to have a Social Security number or ITIN (Individual Taxpayer Identification Number) to open any account. You will also need a government ID from your country of origin or a U.S. state ID. Call ahead to confirm the bank accepts your documents.

What happens if I pass away while the account is open?

The account belongs to the grandchild, so it passes to them—it does not go through your estate. If the child is still a minor, a court may appoint a guardian to manage the account until they turn 18. Talk to a lawyer about whether you need a will or trust to clarify your wishes.

Can I withdraw money from the account if the grandchild needs it for something other than what I intended?

Yes. As the custodian, you can withdraw money for any reason, though you are legally supposed to use it for the child's benefit. There is no enforcement mechanism, but if the child or their parents challenge you later, you could face legal liability. Use the money responsibly and keep records of what you spent it on.