Yes, you can open savings accounts for your grandchildren, but the account structure depends on their age and your role

You can open a savings account in your grandchild's name at most banks and credit unions, but you cannot do it alone if the child is a minor. A parent or legal guardian must be present and sign the account paperwork. If you want to fund the account and manage it yourself without parental involvement, you will need to set up a custodial account under a law like the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA). These accounts let you contribute money and control it until the child reaches the age of majority—usually 18 or 21, depending on your state and the account type.

If you simply want to add money to an existing account a parent has already opened, you can do that without any special structure. You are just a contributor, not the account owner. The distinction matters for taxes, control, and what happens to the money.

Key Takeaways

  • A parent or legal guardian must sign any account opened for a minor, even if you are funding it entirely.
  • Custodial accounts (UTMA or UGMA) let you open and control an account in your grandchild's name without parental signature, but the child gains full control at age 18 or 21.
  • Money you contribute to a custodial account is considered a gift and may have tax consequences if you contribute more than the annual gift tax limit, though most grandparents stay well below it.
  • Savings accounts for minors typically earn very little interest, so consider whether a 529 college savings plan might better match your goal.
  • Once the account is open, you can add money by check, transfer, or cash deposit, but you cannot withdraw it without the child's permission once they reach the age of majority.

Opening a joint account with a parent or guardian present

The simplest path is to go to the bank with the child's parent or legal guardian and open a regular savings account together. You do not need to be the account owner. The parent signs as the account holder, you provide your information as an authorized user or co-signer if you want to make deposits, and the account is opened in the child's name.

Once the account exists, you can fund it however you want—send checks, make transfers, or deposit cash. The parent retains control and can withdraw money for the child's needs. This works well if you trust the parent to use the money for the child's benefit and you do not need to control the account yourself.

Most banks allow you to add money to someone else's account without being on the account at all. You can simply ask the parent for the account number and routing number and send money directly. No signature required from you.

Setting up a custodial account if you want sole control

A custodial account is opened in the child's name, but you act as the custodian—the adult who controls the money until the child reaches the age of majority. You do not need a parent's permission to open one. You will need the child's Social Security number, date of birth, and address, but you can open it yourself at any bank or credit union that offers custodial accounts.

The account is titled something like "John Smith, as custodian for Sarah Smith under the [your state] Uniform Transfers to Minors Act." The child's Social Security number is used for tax reporting, not yours. When you file your taxes, you report any interest the account earns, and the child may owe taxes on earnings above a certain threshold (this varies by year, but is usually a few hundred dollars).

The critical limitation: once your grandchild reaches the age of majority—18 in most states, 21 in a few—the account becomes theirs completely. You lose all control. They can withdraw the money, spend it, or do whatever they want with it. If your goal is to ensure the money is used for education or another specific purpose, a custodial account does not may provide that.

Understanding gift taxes and annual limits

Money you put into a custodial account is a gift. The IRS allows you to give up to a certain amount per person per year without filing a gift tax return or owing any tax. For 2024, that limit is $18,000 per grandchild per year. If you are married, you and your spouse can each give $18,000, for a total of $36,000 per grandchild per year.

Most grandparents stay well below this limit, so gift taxes are not a practical concern. If you do exceed it in a single year, you do not owe tax—you simply have to file a gift tax return (Form 709) and the excess counts against your lifetime gift and estate tax exemption. Unless you are giving away hundreds of thousands of dollars across many years, this will not affect you.

Interest earned inside the account is taxed differently. If the account earns less than about $1,300 in a year (the exact threshold changes annually), there is no tax on the earnings. Above that, the child owes tax on the excess, usually at a lower rate than you would pay. This is rarely a problem with savings accounts, which earn very little interest.

Comparing savings accounts to 529 college savings plans

A regular savings account is flexible—the money can be used for anything. But it earns almost no interest. A 529 plan is a tax-advantaged account specifically for education expenses. Money grows tax-free, and withdrawals for tuition, room and board, books, and some other education costs are not taxed.

The trade-off: if you withdraw money from a 529 for non-education purposes, you pay income tax on the earnings plus a 10 percent penalty. A savings account has no such restriction. If your goal is to save for college, a 529 is almost always better. If you want to give your grandchild money with no strings attached, a savings account or custodial account makes more sense.

You can open a 529 plan in your grandchild's name without parental involvement at most plan providers. The rules are similar to custodial accounts—the money is a gift, and the child can use it for education without tax consequences.

What happens when your grandchild turns 18 or 21

If you opened a custodial account, the account automatically transfers to your grandchild's full control on the date they reach the age of majority in your state. You receive no notice, and you have no say in what happens next. They can withdraw all the money immediately if they want to.

If you opened a regular joint account with a parent, the parent retains control unless they voluntarily remove themselves from the account. Your grandchild can ask the bank to add themselves as an owner or to take over the account, but the parent does not have to agree.

If you simply contributed money to an account the parent opened and owns, you have no control at any point. The parent decides when and how the money is used.

Choosing between custodial and joint accounts

A custodial account is right for you if you want to fund an account yourself, control it completely while your grandchild is a minor, and do not mind that they gain full control at 18 or 21. It requires no parental involvement and is straightforward to set up.

A joint account with a parent is right if you want to contribute money but are comfortable with the parent having control, or if the parent has already opened an account and you simply want to add to it. It is simpler than a custodial account and avoids any questions about who controls the money.

If the parent is unwilling or unable to open an account, or if you do not trust them to use the money for the child's benefit, a custodial account is your only option. If the parent is involved and cooperative, a joint account is usually easier.

How to actually open the account

For a joint account: contact the bank or credit union where you want to open the account. Ask to speak with someone about opening a savings account for a minor. Bring the child's birth certificate or passport, Social Security number, and a photo ID. The parent or guardian must be present and bring their ID. The bank will ask for the initial deposit amount—this can be as little as $25 at many institutions, though some require more.

For a custodial account: call the bank or credit union and ask if they offer UTMA or UGMA custodial accounts. Not all do. If they do, ask what documents you need. You will typically need the child's Social Security number, date of birth, and address. You will provide your own ID and sign the account paperwork. The initial deposit requirement is usually similar to a regular account.

Once the account is open, you can fund it by check, electronic transfer, or cash deposit. Most banks allow you to set up automatic transfers if you want to contribute a fixed amount each month.

Frequently Asked Questions

Do I need the parent's permission to open a custodial account?

No. A custodial account is opened in the child's name with you as the custodian, and you do not need parental consent. However, if the parent finds out and objects, they may try to challenge the account or claim the money belongs to them. This is rare but possible if there is family conflict.

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

You can do that, but the money will go through probate and may be delayed. A custodial account or a transfer-on-death savings account (offered by some banks) lets the money pass directly to your grandchild outside of probate. Ask your bank whether they offer transfer-on-death accounts.

Can I withdraw money from a custodial account if my grandchild needs it?

Only if you can show the withdrawal is for the child's benefit—education, medical care, living expenses, and similar needs. You cannot withdraw it for your own use. The rules vary slightly by state, so check with the bank about what counts as a permitted withdrawal in your state.

What if my grandchild's parent and I disagree about how the money should be used?

If the account is joint with the parent, the parent has equal control and can withdraw money. If it is a custodial account in your name, you control it until the child reaches the age of majority. The parent has no legal claim to the money. This is one reason some grandparents prefer custodial accounts—to ensure the money is used as they intend.

Can I open multiple accounts for the same grandchild?

Yes. You could open one custodial account yourself and contribute to a joint account the parent opened, for example. There is no limit on the number of accounts. However, each account is a separate gift for tax purposes, so if you exceed the annual gift limit across all accounts, you still have to report it.