Answer:
Answer by Ken Golliher: First, check the law of your state. I am aware of several states where a minor may open a bank account and the contract is valid; i.e. the minor cannot "void" the contract at some future date. In that circumstance, there is no need for a joint account. However, if the bank requires an adult signatory then the joint account with a minor is just like every other joint account.
What you are proposing, an account where the minor cannot sign until he reaches age 18, is not a joint account because the rights of the parties are not the same. If your state has a law that recognizes such an arrangement, then I would question your legislature's wisdom, but say it's up to your bank to decide if you want to monitor the ages of signatories on individual accounts.
If this is just an improvisation designed by the bank or the customer, my observations would be 1) you are setting up an arrangement where there is absolutely no assurance that the child would ever receive the funds. If the parent insists you use the minor's SSN, then this is more likely a feeble tax dodge than anything else. and 2) You are voluntarily accepting the liability for enforcing the age restriction; i.e. you would be agreeing to a monitoring responsibility for this account that you have for no other. It is never in the bank's interests to develop one off contractual relationships.
The UTMA account's design features take into account normal parental desires for control, but it also protects the minor and does not require your bank to form administrative tasks.
Answer:
Answer by John Burnett: In some states, the law recognizes a minor's account for which the minor is the sole and exclusive owner, but makes no allowance for a joint account for which one of the owners is a minor. I don't question the reasons behind such laws; I simply recognize they exist. In some states, a minor's individual account can be co-opted by a parent or legal guardian who notifies the bank that he or she is assuming control, and the minor retains ownership of the account but only the parent or guardian can write checks or make withdrawals.
It really is imperative that your bank know what the laws of the state are in this arena. Proceeding without such knowledge is a guarantee that there will be problems in the future concerning ownership, account access and/or FDIC coverage.
First published on BankersOnline.com 12/3/12
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