What you can actually gift and how banks handle it

You cannot gift a savings account itself — the account belongs to whoever opens it and holds the Social Security number or tax ID attached to it. What you can do is put money into an account that someone else owns, give money to someone who then opens their own account, or open a custodial account in a child's name where you control the money until they reach adulthood.

The method you choose depends on who you are giving to (a child, an adult, a teenager), how much money you are putting in, and whether you want them to access it immediately or later. Banks do not treat deposits from other people as a special category — money is money once it lands in the account — but the tax and legal consequences of each approach are different.

If you are giving money to an adult, the simplest path is to transfer cash to their existing account or give them cash to deposit themselves. If you are giving to a minor or want the account to be part of the gift, you will need to choose between a custodial account (where you control it until age 18 or 21) or a regular savings account in their name (where they control it immediately, if they are old enough).

Key Takeaways

  • You can deposit money into someone else's existing account, but you cannot transfer ownership of an account you opened — they must open their own or you must open a custodial account in their name.
  • Custodial accounts let you fund a savings account for a minor and control it until they reach the age of majority, at which point the account becomes theirs.
  • Gifts of money under $18,000 per person per year (2024) do not trigger federal gift tax, but amounts above that require you to file a gift tax return.
  • Money deposited into a custodial account in a child's name may affect their tax liability if the account earns interest, even though you funded it.
  • If you want to give money without opening a new account, you can transfer funds directly to an adult's existing account at any bank.

Depositing money into an adult's existing account

If the person you are giving to already has a savings account, you can transfer money into it directly. Ask them for their account number and routing number, or their bank's wire transfer details. You can send the money through your own bank's online transfer system, by wire transfer, or by writing a check made out to them.

The account holder remains the owner and can use the money however they want. From the bank's perspective, a deposit is a deposit — there is no "gift" category. The money becomes part of their account balance immediately, though wire transfers may take one business day to clear.

This method works for any amount and does not require paperwork. If you send more than $18,000 in a single year (the 2024 annual gift tax exclusion), you will need to file a federal gift tax return with the IRS, though you will not owe tax unless your lifetime gifts exceed $13.61 million. Check with a tax professional if you are giving a large sum.

Opening a custodial account for a child

A custodial account is a savings account opened in a child's name, with you (or another adult) named as the custodian. You control the account and can deposit, withdraw, and manage the money. The child's Social Security number is used to open it, but they cannot access it or make decisions about it until they reach the age of majority — usually 18 or 21, depending on your state and the account type.

Most banks offer custodial accounts under two legal frameworks: UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act). UTMA is more common and allows a wider range of assets to be held. When you open the account, you will specify which framework applies and at what age the child takes control — typically 18 or 21.

To open a custodial account, bring the child's Social Security number, your ID, and proof of address to the bank. Some banks let you open one online. You will fund it with your own money, and that money is legally considered a gift to the child — it belongs to them, even though you control it. Once the child reaches the age you specified, the account automatically becomes theirs and you lose control.

Interest earned in a custodial account is taxed to the child, not to you. If the child is under 18 and the account earns more than $1,300 in a year (2024), the excess is taxed at your rate, not theirs. This is called the "kiddie tax" rule. For most small savings accounts, this does not matter, but it is worth knowing if you are funding a large account.

Giving money to a teenager to open their own account

If the person you are giving to is a teenager (usually 13 or older, depending on the bank), they can open their own savings account with your help. You give them the money, they open the account in their name, and they own and control it from day one. You have no legal claim to the money once it is deposited.

Most banks let teenagers open accounts online or in person with a parent or guardian present. The teenager will need a Social Security number and ID. Some banks require a parent to co-sign or be listed as a custodian even if the teenager is opening the account — ask the bank about their specific rules.

This approach works well if you want the teenager to learn to manage money and make their own decisions about it. The downside is that once the money is in their account, you cannot control how they spend it. If you want to ensure the money is used for a specific purpose (college, a car, an emergency fund), a custodial account gives you more control.

Tax and legal considerations for larger gifts

The IRS allows you to give up to $18,000 per person per year (2024) without filing a gift tax return. If you give more than that in a single year, you must file Form 709 (Gift Tax Return) with the IRS, even if you do not owe tax. The excess counts against your lifetime gift tax exemption, which is $13.61 million as of 2024.

These limits apply to each person you give to separately. If you are married, you and your spouse can each give $18,000 to the same person in the same year without filing, for a total of $36,000. Gifts to spouses have no limit.

If you are opening a custodial account and funding it with a large sum, the entire amount is considered a gift in the year you deposit it. You cannot split it across multiple years to avoid the filing requirement — the gift is complete when the money enters the account. If you want to give more than $18,000 to a child, you can do it, but you will need to file a gift tax return.

Money in a custodial account may also affect the child's financial aid may be able to access for college. Custodial accounts are counted as the child's assets on the FAFSA (Free Application for Federal Student Aid), which can reduce the amount of aid they receive. If college funding is a concern, speak with a financial aid advisor before opening the account.

How to set up the account step by step

For a deposit into an existing adult account: Ask the account holder for their account and routing numbers. Log into your bank's website or app, select "Transfer Money," enter their account details, choose the amount, and confirm. The money will arrive within one business day. Alternatively, write a check or use a wire transfer.

For a custodial account: Visit a bank that offers custodial accounts (most major banks do). Bring the child's Social Security number, your ID, and proof of address. Tell the bank you want to open a UTMA or UGMA account and specify the age at which the child takes control (usually 18 or 21). Deposit the initial amount. The account is now open and in the child's name, with you as custodian.

For a teenager's own account: Go to the bank with the teenager. They will need a Social Security number and ID (usually a school ID or passport). Ask if a parent needs to co-sign. Complete the application and make the initial deposit. The account is now in the teenager's name and they control it.

What happens if you want to take the money back

If you deposit money into an adult's account, you cannot take it back — it is their money now. If you give it as a gift and later change your mind, you have no legal right to retrieve it. If you want to be able to take the money back, do not deposit it into their account; instead, lend it to them and get a written agreement about repayment.

If you are the custodian of a custodial account, you can withdraw money from it, but only for the child's benefit — not for your own use. The IRS and state laws restrict what custodians can spend the money on. Once the child reaches the age of majority, the account is theirs and you cannot touch it.

If you have opened a custodial account and the child reaches adulthood, the account automatically transfers to them. You will lose access. Some custodians try to delay this transfer or convince the child not to take control, but legally the account must be turned over. If you want to retain control of money you are giving to a child, a trust (set up with a lawyer) is a better option than a custodial account.

Frequently Asked Questions

Can I open a savings account in someone else's name without their permission?

No. You need the person's Social Security number and, in most cases, their presence or signature to open an account. If the person is a minor, a parent or guardian must be involved. Opening an account without permission is fraud.

What is the difference between UGMA and UTMA accounts?

UTMA (Uniform Transfers to Minors Act) is newer and more flexible than UGMA (Uniform Gifts to Minors Act). UTMA allows more types of assets (real estate, artwork, etc.) and lets you specify the age at which the child takes control. Most banks now offer UTMA. The tax treatment is the same for both.

Do I have to report a gift of money to the IRS?

Only if the gift exceeds $18,000 per person per year (2024). If you give more than that, you must file Form 709, though you will not owe tax unless your lifetime gifts exceed $13.61 million. Gifts to spouses have no limit and do not require reporting.

Can I change my mind and take money out of a custodial account I opened?

You can withdraw money as the custodian, but only if it is for the child's benefit — education, medical care, living expenses, etc. You cannot withdraw it for your own use. Once the child reaches adulthood, the account is theirs and you have no access.

Will a gift to a child affect their college financial aid?

Yes, if the money is in a custodial account in the child's name. It counts as their asset on the FAFSA and can reduce their aid. Money in a parent-owned account or a 529 college savings plan may have less impact. Speak with a financial aid advisor if this is a concern.