Yes, a minor can be a beneficiary, but the account structure and your bank's rules determine how the money reaches them

A minor can be named as a beneficiary on a bank account, meaning they inherit the money when the account owner dies. However, the money does not automatically go to the minor directly. Instead, it goes to a court-appointed guardian, a parent, or a trustee you name — depending on how you set up the account and what your bank allows. The key is understanding which method works for your situation and your bank's specific requirements.

The most common routes are a payable-on-death (POD) account, a trust, or naming a custodian through a Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) account. Each one works differently, costs different amounts, and gives you different levels of control over how and when the minor gets the money.

Key Takeaways

  • A payable-on-death account lets you name a minor as beneficiary, but the bank will not release funds to the minor directly — they go to a guardian or the person you designate to manage them.
  • A custodial account under UTMA or UGMA lets a minor inherit money and use it at a set age (usually 18 to 25, depending on your state), with a custodian managing it until then.
  • A trust gives you the most control over when and how a minor receives money, but costs more to set up and requires naming a trustee to manage the account.
  • Your bank may not offer all three options, so you need to ask what your specific bank supports before you decide.
  • If you die without naming a beneficiary or setting up any of these structures, the money goes through probate court, which is slower and more expensive for everyone.

Payable-on-Death (POD) Accounts and How They Work

A POD account is the simplest way to name a minor as a beneficiary. You open a regular savings or checking account and tell your bank you want to name someone to receive the money when you die. The bank adds the beneficiary designation to the account at no extra cost. When you pass away, the person you named gets the money directly — it skips probate court entirely.

The catch: if you name a minor directly, the bank will not hand over the money to the child. Instead, the funds go to whoever you designate as the recipient, or to a court-appointed guardian if you did not name one. You can name an adult — a parent, relative, or trusted friend — as the POD beneficiary, and that person then manages the money for the minor. You should also name an alternate beneficiary in case your first choice dies before you do.

POD accounts work at most banks and credit unions. Ask your bank whether they offer this option and whether there is a form to fill out. Some banks let you set it up online; others require you to visit a branch or mail in paperwork. There is no cost to add a POD designation.

Custodial Accounts Under UTMA and UGMA

A custodial account is designed specifically for minors. You open the account in the minor's name, with yourself or another adult as the custodian. The custodian manages the money until the minor reaches a certain age — usually 18, 21, or 25, depending on your state and the type of account. At that age, the money becomes the minor's to use however they want.

Most states use the Uniform Transfers to Minors Act (UTMA), which covers money, real estate, and other property. Some older states still use the Uniform Gifts to Minors Act (UGMA), which covers only money and securities. The rules are similar: you name a custodian, the custodian manages the account, and the minor gets full control at the age your state sets. You can name yourself as custodian while you are alive, but you must name a successor custodian in case you die before the minor reaches the age of majority.

Custodial accounts are straightforward to set up — most banks offer them, and there is no cost. The downside is that once the minor reaches the age of majority, they own the money outright and can spend it on anything. If you want more control over how the money is used, a trust is a better option.

Trusts: The Most Control, But More Complex

A trust is a legal document that lets you control exactly how and when a minor receives money, even after they turn 18. You create the trust, name a trustee to manage it, and specify the terms — for example, "the trustee may pay for the minor's education and medical care, but the minor does not get the full balance until age 25." You then transfer money into the trust or name the trust as the beneficiary of your bank account.

Trusts cost more to set up than POD accounts or custodial accounts. You will need a lawyer to draft the document, which typically costs $500 to $2,000 or more, depending on how complex your situation is. However, a trust gives you the most flexibility. You can specify that money goes toward education, that it is held until the minor is older, or that it is split among multiple minors in different ways.

If you already have a will or estate plan, adding a trust for a minor beneficiary is often simpler and cheaper than creating one from scratch. Talk to an estate planning attorney about whether a trust makes sense for your situation.

What Happens If You Do Not Name a Beneficiary

If you die without naming a beneficiary or setting up any of these structures, your bank account becomes part of your estate and goes through probate — a court process that can take months or years. The court decides who gets the money based on your state's laws, which usually means a surviving spouse or adult children first, then other relatives. A minor cannot inherit directly through probate; a guardian or the court must manage the money on their behalf.

Probate is expensive because it involves court fees, attorney fees, and other costs that come out of the estate. It is also public — anyone can look up what you owned and who inherited it. Naming a beneficiary through a POD account, custodial account, or trust avoids probate entirely and gets money to the people you want much faster.

How to Set Up a Beneficiary Designation for a Minor

Start by calling your bank or visiting a branch and asking what options they offer for naming a minor as a beneficiary. Ask specifically about POD accounts, custodial accounts, and whether they accept trusts as beneficiaries. Not all banks offer all three options.

For a POD account, ask for the beneficiary designation form. Fill it out with the name and contact information of the adult you want to receive the money. For a custodial account, ask whether the bank offers UTMA or UGMA accounts and what the process is to open one in the minor's name. For a trust, you will need to work with an attorney first, then bring the trust document to the bank and ask them to add it as a beneficiary or transfer the account into the trust's name.

Keep a copy of whatever paperwork you sign and tell the adult you named as beneficiary or custodian what you have done. If circumstances change — you move, your relationship with the custodian ends, or you want to name a different beneficiary — update the designation with your bank. Do not assume the bank will remember what you told them verbally.

State Laws and Age of Majority Differences

The age at which a minor gets full control of money varies by state and by account type. With a custodial account, your state law sets the age — usually 18, 21, or 25. Some states let you choose between two ages; others set it by law. With a trust, you decide the age yourself.

A few states have special rules about how much money a minor can inherit before a guardian must be appointed by the court. If the amount is small enough, the money may go directly to a parent without court involvement. Ask your bank or an attorney what your state's rules are, especially if the account balance is large.

Frequently Asked Questions

Can a minor have their own bank account without a parent or guardian?

Most banks require a parent or guardian to open an account for a minor under 18. Some banks allow minors as young as 13 to open a teen checking account with a parent's permission and co-signature. Once a minor turns 18, they can open their own account without a parent's involvement. Ask your bank about their specific age requirements.

What is the difference between a custodian and a guardian?

A custodian manages money in a custodial account and has no other legal authority over the minor. A guardian is appointed by a court and has broader legal authority over the minor's care, education, and decisions. You name a custodian yourself; a guardian is appointed by a court if you die without naming one.

If I name my child as a POD beneficiary, will they get the money automatically?

No. If you name a minor directly as a POD beneficiary, the bank will not release the money to the child. The funds go to a court-appointed guardian or to the person you designate to manage them. Name an adult as the POD beneficiary instead, and that person will handle the money for the minor.

Can I change the beneficiary after I set it up?

Yes. Contact your bank and ask for a new beneficiary designation form. Fill it out with the new beneficiary's information and submit it to the bank. Keep a copy for your records. You can change the beneficiary as many times as you want, but the most recent form on file with the bank is the one that counts.

Do I need a lawyer to set up a POD account or custodial account?

No. POD accounts and custodial accounts are simple enough to set up on your own with your bank. You only need a lawyer if you want to create a trust or if your situation is complicated — for example, if you have multiple children, a blended family, or concerns about how money will be used.