Yes, you can open a bank account for your infant, but it must be in your name as custodian

You cannot open an account solely in your infant's name because they cannot sign documents or enter into a contract. Instead, you open what is called a custodial account or UTMA/UGMA account (Uniform Transfers to Minors Act or Uniform Gifts to Minors Act, depending on your state). The account is legally owned by your child, but you control it as the custodian until they reach the age of majority—typically 18 or 21, depending on your state and the account type.

Most banks and credit unions offer custodial savings accounts with no minimum balance or low minimums ($25 to $100). You will need your child's Social Security number, their birth certificate or state ID, and your own ID and Social Security number to open one. The account earns interest, and you can deposit money whenever you want.

The key difference between a custodial account and a regular savings account in your name is that the money legally belongs to your child from day one. When they reach the age of majority, the account transfers to them, and they have full control. You cannot take the money back or use it for your own expenses—it must be used for the child's benefit.

Key Takeaways

  • A custodial account is opened in your name as custodian but legally belongs to your child from the moment you fund it.
  • You will need your infant's Social Security number, birth certificate, and your own ID to open the account at a bank or credit union.
  • The account transfers to your child when they reach the age of majority (18 or 21, depending on your state), and they gain full control.
  • Money in a custodial account may affect your child's financial aid may be able to access later, so understand the tax and aid implications before depositing large amounts.

What documents and information you need to bring

To open a custodial account, bring your infant's Social Security number and birth certificate (or state-issued ID if you have one). If your child does not yet have a Social Security number, you can request one from the Social Security Administration before opening the account, or some banks will allow you to open the account and add the number later.

You will also need your own government-issued photo ID (driver's license or passport) and your Social Security number. Some banks require a second form of ID or proof of address, such as a utility bill or lease. Call your bank ahead of time to confirm what they need—requirements vary by institution.

A few banks may ask for the child's fingerprints or a photo, though this is less common for infants. If you are opening the account online, you may be able to complete most of the process remotely, but you may still need to visit a branch to verify your identity or sign final documents.

How the account works once it is open

Once the account is open, you deposit money and manage it like any other savings account. You receive statements in your name as custodian, and you can withdraw money at any time. The account earns interest at whatever rate the bank or credit union offers—typically very low for savings accounts, but higher for certificates of deposit (CDs) if you lock money away for a set period.

You can deposit money from your own funds, or others can give you money to deposit on your child's behalf. Some grandparents or relatives ask to deposit money directly into the account as a gift. The bank will not stop you from doing this, but you should understand the tax implications: if the account earns more than a certain amount of interest in a year (the threshold changes annually), your child may owe taxes on the earnings.

You cannot use the money for your own expenses. The law requires that custodial account funds be used for the child's benefit—which includes food, housing, education, medical care, and other necessities. Using the money for your own bills or personal expenses is a violation of your custodial duty, even though you control the account.

Tax and financial aid consequences of custodial accounts

Money in a custodial account is considered your child's asset, not yours. This matters for two reasons: taxes and financial aid.

For taxes, your child's earnings on the account (interest or investment gains) may be taxable. The exact threshold depends on the year, but generally, if the earnings exceed a small amount (around $1,250 in recent years, though this changes), your child will owe taxes on the excess. You may need to file a tax return for your child even if they have no income. The bank will send you a 1099 form if interest exceeds the reporting threshold.

For financial aid, custodial accounts count as your child's assets when they apply for college financial aid. Schools use the Free Application for Federal Student Aid (FAFSA) to calculate how much aid your child receives. Assets in your child's name reduce their aid may be able to access more sharply than assets in your name. If you have a large amount saved in a custodial account, it may lower your child's financial aid package significantly. Some families choose to save in their own name instead to protect aid may be able to access, though this means the money is not legally the child's.

Custodial accounts versus other savings options

A custodial savings account is the simplest option, but it is not the only way to save for your child. Here are the main alternatives:

529 college savings plans are tax-advantaged accounts designed specifically for education expenses. Money grows tax-free if used for tuition, room and board, or other may have access to education costs. They have more favorable treatment on financial aid forms than custodial accounts. However, if the money is not used for education, you may owe taxes and a penalty on the earnings.

Coverdell Education Savings Accounts (ESAs) are similar to 529 plans but smaller—you can contribute up to $2,000 per year per child. They offer more investment flexibility than 529 plans but have lower contribution limits.

Savings in your own name gives you full control and does not affect your child's financial aid. The downside is that the money is legally yours, not your child's, and it may be subject to creditors if you face legal or financial trouble.

Irrevocable trusts are more complex and expensive to set up, but they offer more control over how and when your child receives the money. They are usually only worth considering if you are saving a very large amount.

What happens when your child turns 18 or 21

The age at which your child takes control of the account depends on your state and the type of account. Most custodial accounts transfer at age 18 under UTMA rules, though some states allow you to choose age 21 when you open the account. A few states use UGMA rules, which may have different age thresholds.

When your child reaches the transfer age, the account is legally theirs. You no longer have control, and they can withdraw the money for any reason—there is no requirement that they use it for education or any specific purpose. If you want more control over when they access the money, you would need to set up a trust instead, which is more complicated and costly.

Before the transfer happens, you may want to talk with your child about the account and what you intended the money for. Some parents use this as a teaching moment about saving and financial responsibility. However, legally, once the account transfers, your child can do whatever they want with it.

Where to open a custodial account

Most banks and credit unions offer custodial savings accounts. You can open one at your current bank, or shop around for better interest rates or lower fees. Online banks often offer higher interest rates on savings accounts than traditional banks, though the difference is usually small.

Call ahead or check the bank's website to confirm they offer custodial accounts and what documents they need. Some smaller banks or credit unions may not offer them, so it is worth asking before you visit.

You can also open a custodial investment account at a brokerage firm like Fidelity, Vanguard, or Charles Schwab if you want to invest the money in stocks or mutual funds rather than keep it in a savings account. These accounts work the same way legally, but the money is invested rather than sitting in cash. Investment accounts carry more risk but may earn higher returns over time.

Frequently Asked Questions

Can I open a custodial account if my child does not have a Social Security number yet?

Some banks will let you open the account and add the Social Security number later, while others require it upfront. You can request a Social Security number from the Social Security Administration using your child's birth certificate. Call your bank first to see if they will wait or if you need to get the number before opening the account.

Can I close a custodial account before my child turns 18?

Yes, you can close the account at any time. However, the money still legally belongs to your child, so you cannot take it for yourself. You would need to transfer it to another custodial account or keep it in a different form of savings in your child's name.

What if I need to use the money for my child's medical or education expenses?

You can withdraw money from the account for your child's benefit without penalty. Medical bills, school tuition, and other necessary expenses are all legitimate uses. You do not need permission from the bank—just withdraw the money as you would from any other account.

Does a custodial account affect my taxes or my financial aid?

A custodial account does not affect your taxes or your financial aid may be able to access. The money belongs to your child, so it is their asset, not yours. However, if your child earns interest on the account, they may owe taxes on those earnings. If your child later applies for college financial aid, the custodial account will count as their asset and may reduce their aid.

Can someone else open a custodial account for my child without my permission?

No. Only a parent or legal guardian can open a custodial account for a minor. A grandparent or other relative cannot open one in their name as custodian without your consent. They can give you money to deposit into an account you control, but they cannot create their own custodial account for your child.