How to Properly Endorse a Check to a Minor

When a check is made out to a minor, proper endorsement and deposit procedures are necessary due to legal considerations surrounding a minor’s financial capacity. These steps ensure the funds are handled appropriately and can be accessed by the minor or their appointed custodian.

Legal Framework for Minor Endorsement

Minors, individuals under the age of 18, possess limited legal capacity to enter into contracts, which extends to financial instruments like checks. This principle aims to safeguard minors from unfavorable or uninformed financial decisions. As a result, a minor cannot independently endorse or cash a check like an adult. Instead, a parent, legal guardian, or court-appointed custodian is required to act on the minor’s behalf to manage such financial assets.

Custodial accounts are used to legally hold assets for a minor. The two primary types of these accounts are Uniform Gifts to Minors Act (UGMA) accounts and Uniform Transfers to Minors Act (UTMA) accounts. Both UGMA and UTMA accounts establish that assets legally belong to the minor, but an adult custodian manages them until the minor reaches the age of majority, which is 18 or 21, depending on the state. While UGMA accounts hold cash and securities, UTMA accounts offer broader flexibility, allowing for various assets like real estate, intellectual property, and fine art. These custodial accounts provide a structured legal vehicle for transferring funds to minors, ensuring proper oversight and eventual transfer of control.

Endorsing the Check to a Minor

The original payee of a check must properly endorse it to transfer the funds to a minor. This process involves specific phrasing on the back of the check. The original payee should write “Pay to the order of [Minor’s Full Name]” on the back of the check. Below this, the original payee must then sign their name exactly as it appears on the front of the check.

Additional phrases can be included for security and clarity, especially when the check is for deposit into a specific account. One common addition is “For deposit only,” which restricts the check’s use to deposit into an account, preventing it from being cashed. Another specific endorsement often used is “Pay to the order of [Custodian’s Name], Custodian for [Minor’s Name] under the [State] UTMA/UGMA.” This explicitly designates the custodian and the type of custodial account, providing clear instructions for the financial institution. If the check is directly made out to the minor, the parent or guardian can endorse it by writing the minor’s name followed by “-minor,” their name followed by their relationship (e.g., “-parent” or “-guardian”), their signature, and the account number.

Depositing the Check for a Minor

After the original payee endorses the check to the minor or their custodian, the guardian or custodian deposits the funds. The guardian must add their endorsement to the check by writing “For deposit only” followed by their signature and account number. For custodial accounts, the endorsement should clearly state the custodian’s role, such as “For deposit only / [Custodian’s Name], Custodian for [Minor’s Name].” A suitable custodial account, such as a UGMA or UTMA account, must be established for the minor, as most banks require funds for minors to be deposited into such accounts.

Bank policies regarding check deposits for minors can vary, so guardians should confirm specific requirements with their financial institution before depositing the check. Some banks may allow mobile deposits for checks endorsed to minors, provided the endorsement includes the minor’s name, the custodian’s name and relationship, and the account number. However, some financial institutions may not permit third-party endorsements for mobile deposits, requiring an in-person deposit at a branch. While some banks may permit a parent to deposit a child’s check into their personal account, especially if the child does not have their own account, opening a custodial account is the most appropriate and legally sound approach.