What kind of account to open for my 12-13 year old?

**jIM_Ohio** · 08-21-2008, 05:44 PM

Looking forward to seeing answers...

**Jazzmint98** · 08-21-2008, 05:49 PM

I would recommend an online account. I have an ING Direct account for my daughter who is 15. My name is also on the account as custodial parent, but I'm not sure if it has to be that way. Since she doesn't have other accounts either, I have it linked to my checking account so that I can deposit money into it then I simply do an electronic transfer withdrawing it from my account into hers. It has worked pretty well for us now that DD has a job.

I hope you figure out what works best for you.

**disneysteve** · 08-21-2008, 06:00 PM

Originally posted by huffydeb2003 View Post

Since she doesn't have other accounts either, I have it linked to my checking account so that I can deposit money into it then I simply do an electronic transfer withdrawing it from my account into hers.

Does this create any tax issue since it is passing through your account? My checking account doesn't earn interest, so I guess it really wouldn't matter.

**kork13** · 08-21-2008, 08:43 PM

i agree with huffydeb, an online account would do just fine for her, though I do believe you'd have to be put on as a custodian. As for moving money through your accounts, no it doesn't impact your taxes at all, short of perhaps the $.03 of additional interest you might possibly gain via having a higher average balance.... I'm managing my younger brother's accounts for him while he's on a mission for my church, and when money needs to be put into his, I just put it into my accounts then EFT the money to his. very simple and painless.

**mrpaseo** · 08-22-2008, 01:26 AM

Originally posted by huffydeb2003 View Post

I would recommend an online account. I have an ING Direct account for my daughter who is 15. My name is also on the account as custodial parent, but I'm not sure if it has to be that way. Since she doesn't have other accounts either, I have it linked to my checking account so that I can deposit money into it then I simply do an electronic transfer withdrawing it from my account into hers. It has worked pretty well for us now that DD has a job.

I hope you figure out what works best for you.

This is exactly how I do it, I have even gone so far as to open a sharebuilder account for her and she has started purchasing stocks. Though, I believe at this point to Uncle Sam it's all my money. The key is she is learning, though not as fast as I hoped with me being away. Eventually we will open her own local account, and she will have an online account jjst like her dad.

Ray

**Jazzmint98** · 08-22-2008, 03:46 AM

Originally posted by disneysteve View Post

Does this create any tax issue since it is passing through your account? My checking account doesn't earn interest, so I guess it really wouldn't matter.

The interest is minimal. I don't think it would make any difference.

**MonkeyMama** · 08-22-2008, 05:38 AM

Yes, and the interest on her account is taxed to her. If her interest is under a certain amount ($1800?), it is not taxable though. So I think all in all you will have no tax issues there.

**PrincessPerky** · 08-22-2008, 06:14 AM

If you use ING you can prolly still refer her, follow the referral link to put in her money she gets 250, you get 10.

We did that with each of the older kids. And will for El soon.

The emails from their accounts go to one of ours though, you need to decide if you want to get them or have her get them.

**FrugalFish** · 08-22-2008, 07:03 AM

When I was looking to open an account for our 2 y.o., I found that most online banks were not eager to open an account in the name of a minor. It was not a problem with ING however. DD is the primary account holder, and DH is a joint owner on the account since she is under 18.

**Coleroo** · 08-22-2008, 11:39 AM

Actually, I'm the lone horsey on this one I guess - I think having a "sole" online account for anyone younger than 18 is a bad idea.

Kids and Teens need to experience how real life banking works before being subjected to the abstract concepts of moving money around online, transfers, web banking, etc.

I think it would be best (even if just for 3 or 4 years) to forget about finding the best rate for a while and take her to open an account in person at a "brick and mortar" type of bank. Let her walk through all the steps of dealing with the branch accounts manager, let her work with the tellers, let her see how they physically handle the money in there, let her deal with making transactions at a drive through (from the backseat!

), etc. If the bank has online access, show her how money "appears" on there after she has made a deposit, and how deductions are made after she makes a withdrawal from the teller window.

I know you said you don't want her to have "access" to it right now, and that's fine, but I think this would be a superb teaching tool for her future financial well-being if you guided her with limited access at a physical local bank. There are so many things that we take for granted now that those just starting out with bank accounts do NOT understand. We have a tendency to forget how tough banking truly is when you first start and don't know all the ins and outs. Even if you've been letting her "watch you" for years, you will never know what she TRULY knows unless you guide her to do it on her on for a while.

Plus, most kids (I know me and my friends did, and so do my little cousins today) thrilled at the idea of being "grown up" and dealing with our own bank account at a local bank. An online, inacessible, "web page" only account would take much of the thrill out of it for a beginner and it may hinder learning.

**disneysteve** · 08-22-2008, 12:02 PM

Coleroo - You may a very good point, but my DD happens to be pretty financially savvy (I wonder where she gets that from). She has actually been the one balancing our checkbook each month for about 3 years now. She has gotten allowance for years and has had an account with the Bank of Dad with a savings register, monthly interest, deposits and withdrawals all recorded in writing, so she is pretty familiar with the process. So while I think your advice is spot on for many kids, I think she is past needing those initial steps.

**Coleroo** · 08-22-2008, 08:03 PM

Originally posted by disneysteve View Post

Coleroo - You may a very good point, but my DD happens to be pretty financially savvy (I wonder where she gets that from). She has actually been the one balancing our checkbook each month for about 3 years now. She has gotten allowance for years and has had an account with the Bank of Dad with a savings register, monthly interest, deposits and withdrawals all recorded in writing, so she is pretty familiar with the process. So while I think your advice is spot on for many kids, I think she is past needing those initial steps.

Oh that's excellent!!!! Many people, even financially savvy ones, don't think of doing a "fake bank" or going into such money detail

for their younger kids. I'm not at all surprised by your answer...lol... way to go!

**Like2Plan** · 08-23-2008, 03:47 AM

Originally posted by disneysteve View Post

My daughter is 12 - she'll turn 13 next month. She will celebrate her Bat Mitzvah (the Jewish coming-of-age ceremony) next month as well. We anticipate her collecting a few thousand dollars in gifts as a result. She currently does not have any bank accounts in her name. What should I open for her? For now, I want the money just in a money market type of account. Not that she needs to access the money, but I don't want to tie it up right now. Can I open an account for her with any of the usual online banks? Can it be in her name or does it go in my name as a custodial account? Not sure how that works.

If we do an online account, how does she make deposits and withdrawals if that's her only account? For my own account, I do transfers from our checking account, but she wouldn't be able to do that. Would it make more sense to open a traditional bank account at our local bank?

disneysteve,
Congratulations to you, your wife and your daugher.

By law, your daughter can not have an account in only her name. It can only be a custodial account until she reaches the age of 18. (She can not enter into any contracts until she reaches age 18.)

I think it is a good idea to keep the assets separate so, it would be a good ideal to deposit them directly into your DD's account. If it is unavoidable that it has to go through you account (cash gifts, et'c), just document it.

We have tried many different things over the years, but what has worked out the best was to open an account in a full service credit union.
You should see what types of credit unions you would be eligible to join and see what type of services they provide. Ours has everthing from MMFs, savings accounts, (free) checking accounts, credit cards, IRA, CDs, insurance, loans at very competitive rates and brokerage acccounts. The accounts can be linked.

What happens at age 18 depends on your bank's policies and/or state law. You might want to check into that. Some put the account into your daughter's name alone, some put the custodian's name on the account as well. If it is in your DD's name alone, you will have to get power of attorney on file at the bank if you want to help her manage the assets after she is 18.

**Like2Plan** · 08-23-2008, 03:54 AM

Originally posted by MonkeyMama View Post

Yes, and the interest on her account is taxed to her. If her interest is under a certain amount ($1800?), it is not taxable though. So I think all in all you will have no tax issues there.

I believe it is the first $900.00 of unearned income is not taxed, the next $900.00 is taxed at the child's rate and above that is taxed at the parent's rate. (This would pertain to future income derived from the assets, not the gift itself of course.)

What kind of account to open for my 12-13 year old?