Bank Account for Child with Divorced Parents

Updated on December 17, 2008
N.W. asks from Buffalo Grove, IL
5 answers

My last post lead me to realize that I would like to set up a college savings account for my 7-year old stepdaughter. I believe going to college is VERY IMPORTANT.

My stepdaughter's mom and dad did NOT go to college. Her mom is actually discouraging her from going, and she's only seven!

Because we have her 50% of the time my husband does not pay child support. They take turns claiming her on their taxes. Last year we asked if the stimulus check could be given to my stepdaughter for college or used to buy her much-needed clothes but her mom spent it (and a widescreen TV appeared at their house around the same time!)

I want this account to be for my stepdaughter's future. I want her to start putting a little bit in there for college, and if relatives give her large sums of money then some can be put away. We'll also contribute. What I don't want is for her mom to lay some claim on the money.

Anyone do something similar? Should we set up the account in our name only but know the money is for her? Do we need to do something legal?

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answers from Chicago on

You can set up an account and her mother does not need to know anything about it. in fact you should not put the step daughter name on the account either. Just ear mark this money for her education. You could put the money in a CD. There is CD's that you can keep adding to. You could buy bonds. I believe EE bonds are tax free at maturity when use for education. Put them in your name as well as hers not just in her name. Savings accounts are a bad idea because they draw such little interest.
There is also an education program her in Illinois. I think it is called jump start. All the money is tax deductible when used for education.
I just would not tell your step-daughters mother about the money or the daughter. Just leave it between you husband and you. It is your money after all not his ex-wifes.


1 mom found this helpful


answers from Chicago on

I think this is a very good idea.

Most banks have a "minor savings account" that you can put her name on it and yours. I don't even think you have to be a legal guardian or anything to open it (I am pretty sure I remember my best friend telling me that she opened one for her niece).

I have opened an acct for both of my kids and I think all I needed was their ss# and date of birth to do it.

Best of luck to you.




answers from Chicago on

Hi Nicole ,Sorry this might be a little winded. You and your husband's concerns are very valid . As another mom suggested opening a saving account just for minor's then once a year(tax time)transfer her money into a college bound account,but leaving a some $ in her saving's account , that being said she would have 2 acct. If Im not mistaken you can have a stipulation(sp)that you or your husband have to be present for the withdrawal (on persoanl saving's)example ( mom trying to withdraw ,daddy must be present ). Im a firm believer that a college account is just that for thier future and should never be touched . I know the economy is pretty crazy and someone might feel justified to withdrawal ( and it mightbe )but your protecting your stepdaughter's future (god bless u)so you and your husband should be made aware of the withdrawl. I was just thinking , why cant your husband just open your daughter a account that mom cant have access to and you guys just deposit the money into her account from b-days or holidays from daddy's side . This way you have complete control of her future . I hope this helped and didnt confuse you . I have 3 kids each have a savings and a college bound account .




answers from Chicago on

We also set up a savings account for our daughter that is linked to our other accounts, so that I can easily transfer money into it. I believe that when we set it up (it's technically called an UTMA account), we put myself as the main guardian of the account, meaning that I get the main say in what happens to the account (I think my husband is also listed, but can't do anything without my approval). No one else is allowed to do anything with it, regardless of what they know about the child, and there is no atm card with it, so money can't be removed, except by the parent on the account (and at the bank). It's super easy to maintain, but maybe not the best way to save for school; the interest rates are really crappy now! We also recently opened an online savings account with a much better interest rate that we can easily transfer money to from our checking account. That might be another option for your stepdaughter and no one else would have access to it. Maybe it's a good opportunity to show your stepdaughter how saving money actually makes money (since you'll see the interest on the bank statements), which might, in turn, help her make her own decisions about the importance of saving money. And you could also tell her you're the banker, but that doesn't mean she can't have access to her money, i.e., if she gets a nice check from gramps for Christmas, she can safely put it in 'her' account, but pull a little out (with your help) if she finds something she really wants to buy. Who knows... maybe she'll be more intrigued by watching her money grow than she will be in spending it!
Hope that helps!



answers from Chicago on

Go to your bank and ask to speak to a personal banker-NOT the teller. A personal banker will know more about the products, including restrictions. A minor savings account is restreicted to the nubmer of withdrawals you can make. For the college account, you might want top consider a 529 account. This helps save for college with a low minimum deposit and usually no fees. And I think the interest rate is higher than a regular savings account, especially now. And they are FDIC insured, which yo definitely want to make sure you have, regardless of the account type. Any withdrawals you make to pay for college expenses are tax free but if the money is used for something else, income tax is taken. I would ask a banker what type of account is best for a savings for her own money-allowing withdrawals if she sees something she wants-and the best way to protect that money from anyone else. Her mom might be able to access as her guardian. You want to make sure she can't.

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