There are times when opening a bank account in your child’s name may be more beneficial than simply depositing any money he or she may receive in to your own account and spending accordingly. The sooner you can open a savings account for your child, the better because it will allot more time for interest to accumulate.
There are a few options for how you should go about opening bank accounts for minor children. First, if your state does not have regulations against minor children entering into legally binding contracts, your minor child could be listed as a joint account holder, granting you both access to the funds throughout the life of the account, and transferring the funds to the child in the event of your death. Because both account holders are held responsible for any overdrafts or account issues, a joint account with a minor may not be a viable option.
Open a POD account. POD stands for “Payable on Death.” This means you as the parent will maintain control of the accounts and the funds in them until their death and the funds will be transferred to a beneficiary named on the account. Should you decide your child is trustworthy enough to handle the funds before your death, the POD can be removed. The beneficiary may also be changed at any time, if you want to share the money between two or more children.
Use a custodial account set up according to your state laws regarding the Uniform Transfers to Minors Act, sometimes referred to as the Uniform Gifts to Minors Act. This is the perfect solution for those who want to make monetary gifts to children that cannot be reversed or transferred, but want those gifts to maintain in control of a custodial adult until the child reaches statutory age.
The best way to determine how to go about opening bank accounts for minor children is to speak to a banking professional. They are the most knowledge about opening bank accounts for minor children. This article is intended for informational purposes only and should not replace the advice of a banking professional.