To open a savings account for a child, an adult has to set it up: choose between a joint account (you and the child are co-owners) or a custodial UGMA or UTMA account (the child owns the money, you manage it), gather ID and tax numbers for both of you, and make an opening deposit. Minors generally can’t enter binding contracts on their own, so a parent, grandparent, or legal guardian has to be on the paperwork.
Joint or Custodial: The Decision That Shapes Everything Else
Every other question flows from this one. The two structures look similar at the teller window and behave very differently once money is in them.
Joint Account
You and the child are listed as co-owners with equal rights to deposit and withdraw. For FDIC purposes, each co-owner’s interest is assumed equal unless bank records say otherwise.1FDIC. Joint Accounts You keep full access for the life of the account, and nothing forces you to hand over control when the child turns 18. The money isn’t legally set aside for the child, though — either owner can empty the account.
Custodial Account (UGMA or UTMA)
Custodial accounts run under state versions of the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act. You serve as custodian and manage the money, but the child is the legal owner from the first deposit, and every deposit is an irrevocable gift that can’t be taken back. When the child reaches the age set by state law (usually 18 or 21), the bank transfers full control to them, and they can spend it however they choose.2HelpWithMyBank.gov. What Is a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) Account?
The custodian has a fiduciary duty to use the funds only for the child’s benefit. Spending custodial money on personal expenses, or on things the adult should be paying for from their own income (basic child support is the common example), can lead a court to order full repayment with interest and attorney’s fees. That’s a real legal constraint that doesn’t apply to a joint account.
What to Bring
Federal law requires banks to verify the identity of everyone tied to a new account. Section 326 of the USA PATRIOT Act sets the baseline: institutions must follow reasonable procedures to confirm who you are before opening any account.3FinCEN. USA PATRIOT Act Have these ready before you walk in or start an online form:
- A government-issued photo ID for you. Driver’s license or passport is the norm.4Consumer Financial Protection Bureau. Can I Get a Checking Account Without a Social Security Number or Driver’s License?
- Tax ID numbers for both of you. A Social Security number or an ITIN works for either party; an SSN isn’t required. Some banks will also accept a passport number or alien identification card number.4Consumer Financial Protection Bureau. Can I Get a Checking Account Without a Social Security Number or Driver’s License?
- A physical street address. Federal rules require a residential or business street address; a P.O. box doesn’t satisfy the requirement. If you have no street address, the bank may accept the address of a next of kin or another contact person.5Financial Crimes Enforcement Network. Customer Identification Program Rule – Address Confidentiality Programs
- Proof of your relationship to the child. Most banks ask for a birth certificate or legal guardianship papers. No single federal rule names a specific document, but expect to show something that connects you to the child.
Opening Online or in a Branch
Many banks accept online applications for children’s savings accounts, but it’s less straightforward than an adult account. The Children’s Online Privacy Protection Act restricts online collection of personal information from children under 13; websites and online services must obtain verifiable parental consent before gathering a child’s data.6eCFR. 16 CFR Part 312 – Children’s Online Privacy Protection Rule Some banks handle that by pushing parents into a branch to complete the paperwork, especially for younger children.
Federal banking regulators have also noted that because minors generally lack the capacity to enter contracts, an institution should consult its own legal counsel before opening an account for a minor without a responsible adult as custodian or co-owner.7U.S. Department of the Treasury. Guidance to Encourage Financial Institutions’ Youth Savings Programs In practice, nearly every bank will require you on the application. If you apply online, expect the bank to verify your identity digitally and either approve the account or ask you to visit a branch to finish.
Making the Opening Deposit
Once the application clears, the bank asks for an initial deposit to activate the account. Many children’s savings accounts open with a small amount, sometimes as little as zero dollars, though some banks set minimums of $5 to $25. You can fund it a few ways:
- Electronic transfer. Link an existing checking or savings account and send money by ACH; these transfers typically post in one to three business days.
- Mobile check deposit through the bank’s app.
- Cash or check at a branch for same-day credit.
Monthly maintenance fees on children’s accounts are usually low or waived. Read the fee schedule before opening. Some banks waive fees only while the child is under a certain age or while the balance stays above a set threshold.
How the Interest Gets Taxed
Interest in a child’s savings account is taxable income. Banks file a Form 1099-INT for any account earning $10 or more in interest during the year.8Internal Revenue Service. About Form 1099-INT, Interest Income Amounts under $10 are still technically taxable; the bank just doesn’t have to report them on a form.
A child’s unearned income (interest, dividends, capital gains) falls under the kiddie tax, which prevents parents from parking income in a child’s name to get a lower rate. For 2026:9Internal Revenue Service. Revenue Procedure 2025-32
- The first $1,350 is covered by the child’s standard deduction. No tax owed.
- $1,351 to $2,700 is taxed at the child’s own rate, typically 10%.
- Anything above $2,700 is taxed at the parent’s marginal rate.10Office of the Law Revision Counsel. 26 U.S. Code 1 – Tax Imposed
The kiddie tax applies to children under 18, and to children 18 (or full-time students under 24) whose earned income doesn’t cover more than half their own support.10Office of the Law Revision Counsel. 26 U.S. Code 1 – Tax Imposed A basic savings account earning modest interest usually won’t hit the $2,700 threshold, but watch it if the child also has custodial investment accounts or other unearned income.
Effect on College Financial Aid
The account type can meaningfully change what your child qualifies for in need-based aid. The FAFSA formula treats student-owned assets more harshly than parent-owned ones.
Custodial UGMA and UTMA accounts are reported as the student’s assets on the FAFSA regardless of dependency status.11Federal Student Aid. Current Net Worth of Investments, Including Real Estate Student assets are assessed at 20%, so every $10,000 in a custodial account raises the expected family contribution by $2,000. Parent-owned assets are assessed at 12% and benefit from an asset protection allowance that shields a portion of savings entirely.12Federal Student Aid. 2026-27 Student Aid Index (SAI) and Pell Grant Eligibility Guide
A joint account with the parent as primary owner is generally reported as a parent asset, which carries the lower rate. If financial aid matters, weigh this before you pick the account type, especially at higher balances. Money moved into a custodial account can’t be moved back.
Who Can Take Money Out
Access rules follow the account type.
On a joint account, either co-owner can withdraw any amount at any time without the other’s permission, and no legal rule limits what the money is spent on. Some banks impose age-based policies that keep a minor from withdrawing on their own until 16 or 18, but those are bank policies, not law.
On a custodial account, only the custodian can access funds, and only for the child’s benefit. The custodian has broad discretion over what qualifies: education, medical bills, extracurriculars, and other costs that serve the child are all permissible. What isn’t permissible is using the money to cover things the custodian would otherwise pay from their own income, such as basic child support. Courts have ordered custodians who misused funds to repay the full amount plus interest and awarded attorney’s fees to the child. The custodian also has to keep records of every transaction and make them available for review.
What Happens When the Child Grows Up
Custodial accounts have a built-in end date for adult control. When the child reaches the age set by state law (usually 18 or 21, though some states allow the custodianship to run longer), the bank transfers full control to the now-adult child.2HelpWithMyBank.gov. What Is a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) Account? After that, no restrictions remain on how the money is spent. If handing a young adult a lump sum with no strings gives you pause, that outcome is baked into the account type: the child is the legal owner, and your role as custodian was always temporary.
Joint accounts don’t work that way. Both owners keep access indefinitely, and no age triggers a transfer. That gives you continuing oversight if you want it. The trade-off is that the money is never legally separated from your own assets, which is the whole point of a custodial account for families who want it to be.