What Do You Need to Open a Savings Account If You Are Under 18?

Opening a savings account for a minor provides a valuable opportunity for financial education and future planning. These accounts help young individuals learn about saving and managing funds responsibly. Specific requirements and processes apply when an individual under 18 seeks to establish such an account.

Essential Documents for the Minor and Adult

Establishing a savings account for a minor necessitates specific documentation for both the young individual and the accompanying adult, typically a parent or legal guardian. For the minor, proof of identity and age is required, commonly satisfied by a birth certificate. A Social Security card is also necessary for tax identification, as the account will generate interest income reported to the Internal Revenue Service (IRS). Some institutions may accept a student ID with a photograph as supplementary identification.

The accompanying adult must also provide identification. A government-issued photo identification, such as a driver’s license, state-issued ID card, or passport, is required to verify their identity. The adult’s Social Security number is mandatory, facilitating identity verification and compliance with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. Proof of address, such as a utility bill or lease agreement, may be requested for both the minor and the adult to confirm residency. It is recommended to contact the financial institution beforehand to confirm their documentation requirements.

Navigating Parental or Guardian Roles

The involvement of an adult, typically a parent or legal guardian, is fundamental when opening a savings account for a minor, shaping the account’s structure and control. One common arrangement is a joint account, where the adult is a co-owner with full access to and control over the funds. In this setup, both the adult and the minor can make deposits and withdrawals, with the adult retaining primary oversight. Upon the minor reaching the age of majority, full ownership and control of the account typically transfer solely to the now-adult individual.

Alternatively, a custodial account, such as a Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account, can be established. Under these acts, the adult acts as a custodian, managing the funds for the minor’s benefit, but the assets legally belong to the minor. The funds are considered an irrevocable gift, meaning the custodian cannot reclaim them for personal use.

The minor gains full legal control of the funds at a specific age, typically 18 or 21, depending on the state and account type. Regardless of the account structure chosen, the adult’s physical presence and signature are required to initiate the process. The adult also assumes responsibility for managing the funds, particularly in custodial arrangements where they act as fiduciaries.

The Account Opening Process

Once necessary documents are gathered and the preferred account structure is determined, opening the savings account can begin. Most financial institutions require an in-person visit to a branch to open a minor’s account, allowing for direct verification of identities and signatures. Scheduling an appointment in advance can reduce wait times. During the visit, the identification and other required documents for both the minor and the adult will be presented to a bank representative.

The next step involves completing the application form, which requires information such as names, addresses, Social Security numbers, and contact details for both parties. An initial deposit is required to activate the account, typically ranging from $5 to $25, depending on the institution’s policies. Finally, both the minor and the adult will sign the account agreements and disclosures.

Account Transition at Majority Age

A significant change occurs when a minor account holder reaches the age of majority, typically 18 or 21, depending on state laws and the specific account type. For joint accounts, the adult co-owner’s name may be automatically removed, transferring sole legal ownership and control to the now-adult individual. The financial institution updates its records to reflect this change, recognizing the former minor as the primary account holder. The new adult account holder may need to visit the bank to update their signature card or convert the account to a standard adult savings account.

In the case of a custodial account, such as a UGMA or UTMA, the custodianship terminates when the beneficiary reaches the age of majority as defined by state law. At this point, the custodian’s control ceases, and the assets are fully transferred to the former minor. Financial institutions send notifications to both the custodian and the beneficiary as the transition age approaches, outlining the necessary steps for the transfer of control. This transition empowers the individual with direct management of their accumulated savings.