Are you building on your child’s future savings? How about teaching him or her a few things to know about keeping money? There are many options and various reasons for opening an account for a minor. Banks do have specifications but if you want to get a few tips to consider before starting, read on.
- Laws to abide by. An adult is needed in opening an account for a minor in most states. However if the minor is under seven years of age, you are entitled to open and handle the account for them as parent or guardian. Produce a snap of the minor as well as birth certificate. You must then produce one or two self attested snaps, proof of address such as a utility bill to your name, and proof of identity. Make sure that you are not violating tax related laws in opening this type of account.
- Depositing. The minimum amount to deposit and open an account is usually $50. Consult with your local bank on initial requirements and deposits.
- Checking account. A checking account is usually opened with an adult. One available in all 50 states is in Denver under the Young Americans Bank. Account holders are under 22 years of age, and the average age of customers is 16 years old. Here, an ATM card is already in use but not the debit kind. Cashing in a check, a minor must bear an official ID such as a driver’s license. A minor is generally defined as someone under 18. Under specific states, laws are present to initiate account deposits for minors. In some areas, a minor can open an account as long as he is able to sign his own name, but in any event, his or her guardian or parents can control or overtake. State law governs banking policies. Banks can explain this before you choose which type of account.
- Types of accounts. An ATM, checking account or a particular one under the guardian or parent’s custody may be in order. As a custodian or guardian, you can open for a minor a POD account or Payable on Death. As the parent, the account and funding will only be transferred upon their death. The POD can be taken out if you deem the child trustworthy enough. The beneficiary can be changed freely. This is called The Uniform Transfers to Minors Act, also known as the Uniform Gifts to Minors Act. Depending on your reasons for opening, this in fact is transferring monetary gifts to the minor making it irreversible. The guardian has in effect control over this until the minor is of statutory age.
- Consultations. A banking professional may be needed for the specifics. Opening a bank account for minors makes it in itself a legally binding contract. If the state allows this, the minor can be put in as a joint account holder. This will make you both access the account throughout its existence, as well as transferring amounts even in the parent or guardian’s death. However, there is a risk on this as account issues and overdrafts are deemed applicable to both account holders.
Opening an account does not take long. In essence, consulting is a wise step to take in making decisions for your child. How you want your child to learn in handling money is simple if he or she has an overview of how to spend as well as earn. There is always a better way in teaching kids about money matters. This might just be a good way to show them the ropes.