There are several types of interest bearing savings accounts designed for minors. In Michigan, many financial institutions offer youth savings accounts that also include an ATM card and free online banking. Because these accounts are designed for minors under age 18, most banks offer low-minimum-balance requirements to maintain them.
A deposit savings account may be initiated for a minor by an adult, such as a parent or grandparent. The account may be placed in the child’s name with the adult account holder as a joint owner. The minor must have a valid Social Security number or taxpayer identification number that must be provided at the time the account is opened. The adult account holder must provide two pieces of identification and a Social Security number. Banks vary regarding the amount of funds required to open the account, which may be as low as $10.00 or as high as $50.00. Funds may be depositing on an ongoing basis and withdrawn by the adult account holder.
Accounts for Teens
Some savings accounts are designed for teens -- ages 13 to 17 years of age, depending on the bank. Individuals within the required age range may open a savings account in their own names upon written approval by the parents. Aside from parental consent, additional requirements to open the accounts vary and are determined by the banks. The teen account holder can withdraw funds up to a certain limit and deposit funds in the account.
A custodial savings account for a minor allows an adult to deposit funds for benefit of a minor under the age of 18. The custodian manages the funds in the account until the minor reaches the age of majority. Pursuant to the Michigan Uniform Transfers to Minors Act, the minor retains legal title to the funds in the custodial savings account, while the custodian, who is usually the parent, retains control of the account. The Uniform Transfers to Minors Act provides ways for adults to transfer property to minors and use the funds for the benefit of the minors. Adults may choose to establish a savings account under the UMTA or set up a regular deposit account.
Age of Majority
When a minor reaches the age of majority, which is 18 years old in Michigan, she has full access to the balance in the savings account. With a custodial account, the custodian may establish an account that transfers ownership to the minor at the age of 21 rather than 18.
Video of the Day
- Keith Brofsky/Photodisc/Getty Images