Can a Parent Cash a Check Made Out to a Child?

When a check is received that is made out to a child, parents often wonder about the process for accessing these funds. While it might seem straightforward, specific considerations arise due to a child’s minor status and the regulations governing banking institutions. Understanding these requirements helps ensure the funds are handled appropriately and according to financial guidelines.

Legal and Banking Principles for Checks to Minors

A check made out to a minor is legally considered the child’s property. Minors generally lack the legal capacity to independently endorse or cash checks, requiring adult involvement. Banks have policies to protect these funds and mitigate their liability. The age of majority, typically 18 or 21 depending on the jurisdiction, signifies when a person gains full legal rights and financial autonomy.

Financial institutions implement specific rules because they are dealing with individuals who cannot enter into binding contracts. These rules aim to safeguard the child’s assets, ensuring the money is managed responsibly on their behalf. Consequently, banks often require a parent or legal guardian to participate in the transaction. This oversight prevents potential misuse of funds and helps maintain compliance with banking regulations concerning minor accounts.

Information and Documentation Needed

Before cashing or depositing a check made out to a minor, gather necessary information and documents. The physical check is essential, along with the parent or guardian’s valid government-issued identification, such as a driver’s license or passport. Depending on the bank’s policies, the child’s identification, like a birth certificate or Social Security card, may also be requested to verify their identity and your relationship.

Proper endorsement of the check is a specific requirement that varies slightly among financial institutions. Generally, the endorsement should include the child’s name, followed by their status as a minor, and then the parent or guardian’s name and relationship. For example, an endorsement might read: “[Child’s Name], minor, by [Parent’s Name], Parent/Guardian.” Adding “for deposit only” and the account number can further restrict the check’s use, directing the funds to a specific account and enhancing security.

Methods for Accessing Funds from a Child’s Check

Once documentation is prepared and the check is endorsed, several avenues exist for accessing funds. One common approach is depositing the check into the parent’s existing bank account. While some banks permit this, especially if the child does not have their own account, others may have limitations or require additional approval, particularly for larger amounts. Confirm your bank’s specific policy, as some may necessitate both the parent and child being present or additional verification.

Alternatively, if the child already has a bank account, such as a minor’s savings account, the check can be deposited directly. This method aligns with bank policies since funds go into an account established in the child’s name. The parent’s endorsement, indicating their role as guardian, is usually sufficient. Mobile deposit options may also be available, requiring proper endorsement for digital submission.

Another option is to open a new custodial account for the child, such as a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account, to deposit the check. This involves establishing an account where an adult, typically the parent, acts as the custodian managing funds for the minor’s benefit. Opening such an account often requires the parent’s identification and the child’s Social Security number. A custodial account provides a dedicated place for the child’s funds.

Understanding Custodial Accounts

Custodial accounts, primarily structured under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA), allow adults to hold and manage assets for a minor. These accounts are established with a designated custodian, responsible for investing and administering funds until the child reaches a specified age. Assets within these accounts are considered an irrevocable gift to the minor.

The age at which the minor gains full control of funds varies by jurisdiction, typically ranging from 18 to 25 years old, depending on state law. While the custodian manages the account, all expenditures must be for the minor’s benefit. Income generated within a custodial account, such as interest or dividends, is generally taxed to the child. The “kiddie tax” rules apply to unearned income above certain thresholds; for example, in 2025, the first $1,350 is generally tax-free, the next $1,350 taxed at the child’s rate, and amounts over $2,700 taxed at the parent’s rate.