Financial institutions offer a range of options to young customers and their guardians.
Minor’s account
A minor’s account is an account that an adult opens jointly with a minor. It can be opened at a bank, a credit union or a mutual fund. The child’s name is first on the account and the guardian’s (parents’, grandparents’) second. You need the child’s Social Security number and an ID, or, if the child has none, a birth certificate.
Before going to your financial institution, it is a good idea to call and ask about the requirements.
Financial institutions have various offers to attract young customers. For example, at the Polish & Slavic Federal Credit Union (PSFCU), accounts for minors are divided into three categories depending on age: Odkrywca Krainy Finansów (“Explorer of the Land of Finance,” up to age 9), Młody Znawca Finansów (“Young Finance Connoisseur,” ages 10–15) and Młody Expert Finansów (“Young Finance Expert,” ages 16 to 18). Each type of account offers products, services and perks appropriate to the young customer’s age.
Accounts for teenagers
Many institutions, including our own Polish & Slavic Federal Credit Union, allow teenagers to open an account on which they can make deposits and withdrawals themselves. The teenager signs the account application himself or herself, so banks set a certain age limit (for example, 16 at PSFCU). Banks waive fees on accounts for minors until they come of age. For example, at PSFCU a junior aged 16 to 18 will get a savings account, a checking account and an ATM card.
Not every institution will give a junior a debit card before age 18, but it is worth asking, because banks have various programs for young people.
Education account
A Coverdell Education Savings Account (ESA) is an account intended for a child’s education. It is a type of trust or custodial account created for a chosen beneficiary, who can be any child under age 18. Contributions to an ESA, up to $2,000 a year, are not tax-deductible, but the money grows tax-free. It can be taken out at any time, provided it is spent on education costs – in elementary school, high school or college.
An ESA can be opened and funded by parents, grandparents, uncles, aunts or friends – anyone who wants to pay for a child’s education. There are certain income limits.
Any number of ESAs can be opened for each child, but total contributions cannot exceed $2,000 a year.
529 college savings plan
529 plans, named after the section number of the tax code, are savings accounts for young people’s education whose earnings are exempt from federal and state taxes. 529 plans are governed by state law and are approved in all states. They offer flexibility in investing the money and a tax exemption when the savings are used to pay for higher education at any accredited college or university.
Basic information about 529 plans is provided by the IRS: www.irs.gov – 529 plans: questions and answers.
POD or Totten Trust
If we want to keep complete control over the money, we can use our own account and leave it to the child in case of our death.
A “pay-on-death” account (POD for short), also called a Totten Trust, is an ordinary account at a financial institution with a beneficiary (heir) added. We deposit the money intended for the child into an account we have opened in our own name. We add the child as the beneficiary, who will get the money after our death. The beneficiary inherits the money without any unnecessary procedure – after our death, he or she brings the death certificate to the financial institution to collect the money. The situation becomes complicated, however, if the child is still a minor at the time of our death. Then only the child’s legal guardian can collect the money.
Legally, the money in a POD account is ours, so the child has no access to it, either now or after coming of age. Since the money does not belong to the child, it does not reduce his or her chances of getting financial aid for college.
Custodial account
If you would like to set up a trust for a child but don’t want the hassle or high costs, consider a custodial account, called, depending on the state, a UTMA (short for Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act) account.
A UTMA account can be opened at any financial institution. The child is listed as the account owner, and his or her Social Security number is needed. The account must also have a custodian, who is authorized to manage the money. When the child comes of age, the account is closed and the money is transferred to the child’s individual account.
A custodial account can be opened as easily as any other account at a financial institution. You do not need a lawyer’s help.
The child, as the account owner, is obligated to pay taxes on the income, but currently (in 2026) the first $1,350 a year of interest and other investment income is tax-free for the child. Note: a child’s investment income above $2,700 a year may be taxed at the parents’ tax rate (the so-called kiddie tax).
A UTMA account is opened just as easily as a regular account – you simply check the appropriate box, write in the child’s name with the notation “a minor” and the custodian’s name. Opening a UTMA account costs nothing, unlike trusts, which cost hundreds or even thousands of dollars to set up, depending on their complexity.
You should approach opening a UTMA account with care, especially when a larger sum is involved, because it is an irrevocable gift.
Drawbacks of keeping money in a child’s name
Money kept in a child’s name reduces his or her chances of getting financial aid for college. Many loving parents and grandparents deposit considerable sums in children’s accounts. This is a mistake. Colleges consider UTMA accounts and other accounts opened in the child’s name to be the child’s assets and require a large part of them to be spent on tuition.
Advice: A high school student’s money should be kept in the parents’ name (or better yet – the grandparents’).
Elżbieta Baumgartner
Elżbieta Baumgartner is the author of many books on personal finance and consumer topics, including “Jak chować pieniądze przed fiskusem” (“How to Hide Money from the Taxman”), “Powrót do Polski” (“Returning to Poland”), “Amerykańskie emerytury” (“American Pensions”), “Emerytura reemigranta w Polsce” (“A Returning Emigrant’s Pension in Poland”), “Ubezpieczenie społeczne Social Security” (“Social Security”), “Otwieram biznes” (“Starting a Business”) and others. They are available in Polish-American bookstores and directly from the publisher: Poradnik Sukces, 255 Park Lane, Douglaston, NY 11363, tel. 1-718-224-3492. A list of these and many other guides is available online at: www.PoradnikSukces.com
Updated October 2026.
