Yes, you can open a bank account for someone else, but there’s an important condition. To do so, you either need to also be an account holder or have a certain form of access. For instance, you can likely open an account for your kid, your spouse, or someone who has deemed you their power of attorney. In most cases, that other party will need to be present and participate in the account opening process.
Here’s what you need to know about the ins and outs of the process.
Key Points
• Opening a bank account for someone else is permissible under specific conditions such as joint ownership or having power of attorney.
• Minors cannot legally open bank accounts; however, an adult can open a custodial or joint account for them.
• For joint accounts, both parties typically need to be present during the account opening and provide valid identification.
• Power of attorney allows an individual to manage another’s bank account, requiring legal documentation and identification during the account setup.
• The process involves providing proof of identity, filling out an application with personal information, and possibly making an initial deposit.
How Do Bank Accounts Work?
Bank accounts act as a vessel to park and often use your money. Typically, banks, credit unions, and other financial institutions offer several different types of accounts. Each works in its own way. Some standard offerings include:
• Checking accounts. A checking account allows the account holder to deposit funds and use the money to pay bills, write checks, or shop with a debit card. While some accounts earn interest, it may only be a tiny percentage.
• Savings accounts. Unlike checking accounts, savings accounts are designed to hold and grow your money for an extended period. You can then use this money in the future or keep it as a rainy day fund. Savings accounts typically earn interest. Federal law may restrict the number of withdrawals you can take out of a savings account; check with your financial institution for details.
• Money market accounts. Similar to savings accounts, money market accounts earn interest. Some money market accounts may have a debit card and check-writing features. Also, the number of withdrawals you can make from this type of account may be restricted.
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Is It Possible to Open a Bank Account for Someone Else?
Now, for the question “Can I open a bank account for someone else?” There are three circumstances in which banks allow you to open an account for someone else. Either you’re opening the account for a minor, a joint account holder, or you hold power of attorney for another individual. Here’s a bit more detail on each of these situations.
• Bank account for a minor. Minors cannot open a bank account according to federal law. Therefore, if you want to begin teaching your kids the concept of saving early on, you can open an account for a child. You do so by opening a custodial account or joint account. With a custodial account, the child owns the funds within the account, but the parent manages them until the child reaches the age of maturity, which is usually 18 years old. With a joint account, you and your child both have access to the account. As the parent, though, you can monitor the activity within the account, like setting withdrawal limits.
• Bank account for a co-owner. Your other option is to become a joint or co-owner of a bank account. When you set up a joint bank account, you and the other co-owner have access to the funds. In many cases, you will be able to make deposits and withdrawals at your discretion; in others, you will need the other account holder’s approval to conduct transactions.
Usually, you open a joint account with someone you have already established a financial relationship with, like a spouse or other family member. Once you open the account, you can go about managing the joint bank account together.
• Power of attorney. When someone gives you a power of attorney, you can manage their bank accounts on their behalf. However, you must keep your own money separate from their accounts. When opening the account, the bank usually requires a legal power of attorney document and a photo ID. You may also need to fill out the bank’s power of attorney form. Also, the account will usually be in the other party’s name, but you will have authority over the account.
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Steps to Open a Bank Account for Someone Else
There are typical steps for opening a bank account, though every bank, credit union, or other financial institution may have a slightly different process. Although the details may vary, here are some common steps you will usually take when opening a new bank account for someone else.
Valid Proof of Identity
The first step to opening a bank account for someone else is to provide a valid proof of identification. When you’re opening an account for a minor, you and your child must be present during the account opening process. You and your child will also have to provide a form of identification such as:
• U.S. driver’s license
• Social Security card
• Birth certificate
• Immunization record
• School photo ID
• Passport/alien ID.
When you’re opening an account with someone else who is not a minor, both parties usually must be present to open the account. Also, you will have to provide the same forms of identification. Some common forms of identification include:
• U.S. driver’s license
• U.S. state ID
• Passport.
If you’re a power of attorney for someone else, you will also need to bring your notarized power of attorney legal document. Depending on the bank, they may also require you to fill out a power of attorney form to accompany the rest of the documentation.
Basic Information
In addition to showing valid proof of identification, you will likely need to fill out an application. On the application, the bank will request personal information from each account holder. This information can include:
• Social Security number or Tax ID (for business accounts)
• Utility bill to verify current address
• Name
• Address
• Phone number.
Initial Deposit
Some banks may also require an initial minimum deposit or a monthly minimum balance to keep the account active. Typically, banks require between $25 and $100 to open an account. However, some institutions may have no deposit requirement. It’s a good idea to know upfront if you’ll need to deposit funds to activate your account.
Recommended: What Is a High-Yield Savings Account?
Things to Consider When Opening a Bank Account for Someone Else
Opening a bank account for someone else may involve a family member. In these cases, you probably feel pretty sure the other party is trustworthy.
But what about opening an account for someone else who is a friend or distant relative? Consider these points before you open a bank account for someone else.
• Limited privacy. When you combine your finances with another individual, you forgo your privacy when managing your money individually. For example, the other account holder can see all of the transactions within the account and know how you spend your money. So, if this raises some concerns, you may want to reconsider.
• Shared financial responsibilities. Opening an account with someone else means you may now need to share financial responsibilities such as paying bills or saving for joint retirement (as well as any account fees). If the contributions or withdrawals are uneven, this financial partnership could be harmful, so discuss each party’s contributions and expectations for managing the account.
• Use multiple accounts. If the idea of merging financial lives doesn’t suit you, you might want to continue managing your money separately and use the joint account for a few shared expenses. This way, you can keep your privacy while managing your money with someone else.
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The Takeaway
Yes, you can open a bank account for someone else. However, they will usually have to be aware and participate in the account opening process. But, before you open an account on someone else’s behalf, make sure you understand the financial implication of this decision, such as forgoing your privacy. While the process is fairly straightforward, you do want to be sure the parties involved understand the ground rules and are comfortable with the shared access and responsibility.
Whichever path you take (shared or separate accounts), you can find banking options with SoFi.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
Can I open a bank account on behalf of someone else?
Yes, you can typically open an account for a minor or joint account holder. However, both parties will need to be present to open the account. It’s also possible to open an account on behalf of someone else if you’re their power of attorney.
What do I need when opening a bank account for someone else?
When opening a bank account for someone else, you and the other party must usually be present. You and the other applicant will also need to provide valid proof of identification, as well as personal information like your Social Security number and address.
Can I open a bank account for a younger sibling?
Yes, you can open a bank account for younger siblings as long as they are over 18 years old and participate in the opening process. If they are under 18, they may need a parent or legal guardian to open the account with them instead.
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