Can You Put a Certificate of Deposit (CD) in a Child's Name? How to Set It Up

Learn how to put a Certificate of Deposit (CD) in a child's name using custodial accounts under UGMA/UTMA for smart saving and earning interest.

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Yes, you can indeed put a CD (Certificate of Deposit) in a child's name. Typically, this involves setting up a custodial account under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). The account is managed by an adult custodian until the child reaches adulthood. This can be a smart way to save for the child's future while potentially earning interest. It's essential to consult with a financial advisor to understand the specifics and implications of setting up such an account.

FAQs & Answers

  1. Can a minor directly own a CD account? No, minors usually cannot directly own a CD account. Instead, adults set up custodial accounts under UGMA or UTMA to hold the CD until the child reaches adulthood.
  2. What is a custodial account under UGMA or UTMA? A custodial account under UGMA or UTMA allows an adult to manage assets on behalf of a minor until they reach legal age, making it possible to hold investments like CDs in a child's name.
  3. Are there any tax benefits to putting a CD in a child's name? Putting a CD in a custodial account may offer some tax advantages, but it's important to consult a financial advisor to understand specific tax implications for your situation.
  4. When does the child gain control of the CD in a custodial account? The child gains control of the custodial account and its assets, including the CD, once they reach the age of majority defined by state law, usually 18 or 21 years old.

Watch More

For more insights on saving and investing for children, check out our videos on custodial accounts, education savings plans, and smart investment strategies for minors.

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