You can open a savings account for someone else, but the rules depend on their age and your relationship to them
A parent or guardian can open a savings account for a minor child in most cases, and the account belongs to the child even though an adult controls it. An adult cannot open a savings account in another adult's name without their knowledge and permission — that would be fraud. If you want to set money aside for someone else, you have several legal options: a joint account where both people own the money, a custodial account where you manage it until they reach adulthood, or simply giving them the money to open their own account.
The specific rules vary by bank and by state, so you will need to contact the bank directly to learn what documents they require and what account types they offer. This guide explains the main paths and what each one means for ownership, access, and taxes.
Key Takeaways
- A parent or legal guardian can open a custodial account for a minor child, and the child owns the money even though the adult controls it until age 18 or 21.
- A joint account means both account holders own all the money and can withdraw it at any time, so use this only with someone you fully trust.
- You cannot open an account in an adult's name without their permission and signature — the bank will require identification from the account owner.
- Custodial accounts and joint accounts have different tax consequences, so check with your bank about how interest is reported.
- If you want to leave money to someone after you die, a will or beneficiary designation is the legal way to do it, not an account opened without their knowledge.
Custodial accounts for minors: who controls the money and when
A custodial account is a savings account opened by an adult (the custodian) for a minor child (the beneficiary). The child's name is on the account, the child owns the money, and the child's Social Security number is used for tax purposes. The adult can deposit money, withdraw money, and manage the account until the child reaches the age of majority — usually 18 or 21, depending on your state and the type of account.
When the child turns 18 or 21, the account transfers to their full control. They can then withdraw all the money, close the account, or keep it open. The adult custodian has no claim to the money and cannot prevent the child from taking it. This is why custodial accounts work best when you trust the child's judgment or when you are the parent or legal guardian.
To open a custodial account, you will need the child's Social Security number, proof of the child's identity (usually a birth certificate), and your own identification. Some banks call these UTMA or UGMA accounts (Uniform Transfers to Minors Act or Uniform Gifts to Minors Act), which are the legal frameworks that govern them. Not all banks offer custodial accounts, so call ahead.
Joint accounts: both people own all the money
A joint account is a savings account with two or more owners. Both people own all the money in the account, and either person can withdraw any amount at any time without permission from the other. If you open a joint account with someone, they can take all the money out tomorrow and you have no legal recourse.
Joint accounts are useful when you and another adult want to pool money for a shared goal — a household emergency fund, a vacation fund, or a down payment. They are not useful if you want to set money aside for someone without giving them immediate access to it. If you open a joint account with an adult child or another family member, understand that you are giving them full access to that money.
To open a joint account, both account holders must go to the bank together or sign documents separately, and both must provide identification. The bank will ask how you want the account titled and whether you want survivorship rights (meaning if one person dies, the other automatically owns all the money). Joint accounts are straightforward to set up and most banks offer them.
What you cannot do: opening an account without someone's permission
You cannot open a savings account in an adult's name without their knowledge and permission. Banks are required by federal law to verify the identity of the account owner, and the account owner must sign the account agreement. If you try to open an account using someone else's name and Social Security number without their consent, you are committing fraud and identity theft.
This applies even if your intentions are good — even if you want to save money for a family member's future or surprise them with a gift. The legal way to set money aside for someone is to open an account in your own name, or to open a joint account with their knowledge and signature, or (if they are a minor) to open a custodial account in their name.
If someone opens an account in your name without permission, contact the bank immediately and file a report with the Federal Trade Commission at IdentityTheft.gov. You may also want to file a police report and place a fraud alert with the credit bureaus.
Tax reporting for custodial and joint accounts
Interest earned in a custodial account is taxed to the child, not to the adult custodian. The bank will send a 1099-INT form to the child's Social Security number. Depending on the child's age and the amount of interest, some or all of it may be tax-free. This is generally better than earning interest in your own account and then giving the money to the child, because the child may be in a lower tax bracket.
Interest earned in a joint account is split between the account holders based on who contributed the money. If you put in all the money and the other person contributed nothing, you report all the interest. If you both contributed equally, you each report half. The bank will issue a 1099-INT to each account holder's Social Security number, or to one person with instructions to split it. Ask your bank how they handle this.
Keep records of who contributed what to a joint account, because the IRS may ask for proof if the interest is substantial. For a custodial account, keep records of deposits and withdrawals so you can show the child's account history when they turn 18.
Alternatives if the person is an adult and you want to leave them money
If you want to leave money to an adult after you die, do not open a secret account in their name. Instead, use a will, a beneficiary designation, or a payable-on-death account. A payable-on-death (POD) account is a savings account in your name with a named beneficiary. When you die, the money goes directly to that person without going through probate. You control the account while you are alive, and the beneficiary has no access to it until you die.
To set up a POD account, open a regular savings account in your name and ask the bank to add a payable-on-death beneficiary. You will need the beneficiary's name and Social Security number, but they do not need to sign anything or even know about it. When you die, the beneficiary contacts the bank with a death certificate and can claim the money.
If you want to give money to someone now but want to make sure they use it for a specific purpose, you can also give them the money directly and ask them to open their own account, or you can open a joint account and discuss the plan together. Transparency is simpler and safer than trying to manage someone else's money without their knowledge.
What happens if a minor's custodian dies or becomes unable to manage the account
If the custodian dies, the account does not automatically close. The money stays in the account under the child's name and Social Security number. The child's other parent, a court-appointed guardian, or the child themselves (once they reach adulthood) can contact the bank and take control of the account. If the child is still a minor and has no other guardian, a court may appoint someone to manage the account on their behalf.
If the custodian becomes incapacitated and cannot manage the account, the child's other parent or a court-appointed guardian can take over. Some banks allow you to name a successor custodian when you open the account, so the account automatically transfers to that person if you die or become unable to manage it. Ask your bank whether they offer this option.
Frequently Asked Questions
Can I open a savings account for my grandchild?
Yes, if you are the legal guardian or if the child's parent consents. Open a custodial account in the child's name using their Social Security number and birth certificate. If you are not the legal guardian, ask the parent to open the account with you, or ask them to open it and let you contribute money to it.
What if I want to give money to an adult but they don't know about it yet?
You cannot open an account in their name without permission. Instead, open an account in your own name, set the money aside, and tell them about it. Or use a payable-on-death account so the money goes to them after you die. If you want to give them money now, give it to them directly and let them decide what to do with it.
Can I remove someone from a joint account?
You can close a joint account, but you cannot unilaterally remove the other person from it. Both account holders usually have to agree to close it. If you want to separate your finances, you can withdraw your share of the money (if you can prove how much you contributed) and open a new account in your name alone. Talk to the bank about your options.
Do I need the other person's permission to add them to my savings account?
Yes. To add someone to an existing account as a joint owner, both people must go to the bank together or sign documents, and both must provide identification. The bank will not add someone without their knowledge and consent.
What's the difference between a custodial account and a trust?
A custodial account is simpler and faster to set up — you just go to the bank. A trust is a legal document that can hold money, property, and other assets, and it can name a trustee to manage them for a beneficiary. Trusts are more flexible but cost more to set up and require a lawyer. For a simple savings account for a minor, a custodial account is usually enough.