Child’s Savings Account?
I would like to give money in some form to each of my nephews for Christmas. I thought about opening a savings account for each of them in their name and my name, is this even possible? Also, while their mother is getting her college degree they are using government assistance, food stamps, medical card, etc, if they have a savings account will this affect their assistance?
Would a bond be a better route than a savings account and who pays taxes on interest of a savings account? I need suggestions on how to go about this please. Thanks in advance.
Yes and yes. You can set up a joint account with anybody and yes, it may affect their government assistance. I think a savings bond is a better idea because it won’t kick in for years and therefore it won’t really change their income status. Set up a trust for the kids and put the savings bonds in it.
If you do set up bank accounts for them, make sure they are really “savings accounts” alone. Some banks will trick adults into setting up accounts that actually have bank fees that would drain the money out over time.
Also, consider whether their mother might be tempted to use the accounts for financial purposes by putting bills in the kids’ names or signing them up for credit cards. That could lead to the kids having credit ratings before they’re ready. I don’t know if she’d do that of course but I’ve heard of mothers who do those things.
Bipartisan Fiscal Commission