How to Cash a Check Written to Your Child

Receiving a check made out directly to a minor child presents a unique situation for parents or guardians. Children, typically considered minors until age 18, lack the legal capacity to independently endorse or cash checks. This means specific procedures are necessary to access these funds on their behalf. The process involves understanding banking policies and establishing appropriate financial accounts to manage the child’s money.

Understanding the Challenge

A check written directly to a minor cannot simply be cashed by the child, nor can a parent easily deposit it without proper authorization. Financial institutions adhere to regulations protecting minors, who are legally unable to enter into contracts, including endorsing checks. This safeguards the child’s assets and prevents potential fraud. Banks require an adult with legal authority to manage funds for a minor, verifying their identity and confirming their legal right to handle the funds.

Common Methods for Accessing Funds

Several methods exist for parents or guardians to access funds from a check written to a child. One option involves depositing the check into an adult’s existing account. Some banks permit this, but it often requires a specific endorsement like “Pay to the order of [Parent’s Name] for the benefit of [Child’s Name].” Bank policies vary, and not all banks offer this flexibility.

Another common approach is opening a minor’s bank account, often structured as a joint account where the parent or guardian is a co-owner or custodian. This arrangement grants the adult legal access to deposit and manage the funds. Many banks offer savings accounts for minors, allowing accounts for children of any age when opened jointly with a parent.

A more structured option includes using a custodial account, such as those established under the Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA). These accounts are designed to hold assets for minors, with an adult serving as the custodian responsible for managing the funds. UGMA and UTMA accounts offer a clear legal framework for holding and investing a minor’s assets until they reach the age of majority, typically 18 to 21 years old, depending on state law.

Practical Steps and Requirements

Executing the deposit or cashing of a check for a minor involves specific steps and required documentation. Parents or guardians should provide valid government-issued identification, such as a driver’s license or state ID. For proof of relationship and the child’s identity, a birth certificate or the child’s Social Security card is commonly requested.

Proper endorsement of the check is important, and the format can vary by bank. A common method involves writing the child’s name, followed by “minor,” then the parent’s name and relationship (e.g., “parent” or “guardian”), and finally the parent’s signature. For example, ” [Child’s Name], minor, by [Your Name], parent or guardian.” Some banks may also request adding “For deposit only” and the account number to ensure the funds are routed correctly.

Visiting a bank branch in person is often the most reliable method for depositing a check made out to a minor. While mobile deposit might seem convenient, many financial institutions have stricter policies for third-party endorsements or checks made out to minors, often requiring an in-person transaction. It is advisable to contact the bank beforehand to confirm their specific requirements, as policies differ between institutions.

Important Considerations for the Funds

Once a check written to a minor has been cashed or deposited, important considerations arise regarding the ownership and management of those funds. The funds legally belong to the child, even if held in a parent’s or custodial account. The custodian of an UGMA/UTMA account has a fiduciary responsibility to manage the assets for the child’s benefit, and these funds become the child’s property irrevocably.

For larger sums, potential tax implications exist. Gifts to a child generally fall under the annual gift tax exclusion, which was $18,000 per recipient for 2024. Amounts exceeding this may require the giver to file IRS Form 709, though actual gift tax is rarely owed due to a high lifetime exemption.

Unearned income from these funds, such as interest or dividends, may be subject to “kiddie tax” rules. This applies to unearned income above certain thresholds, with varying tax rates. Consulting a tax professional is advisable for significant amounts to understand specific obligations.