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Opening Accounts for Children

Opening accounts for your child is easy! We’re here to help you choose the best account for your needs and savings goals. In 2019, a child can be given up to $15,000 in cash or other assets from an individual, without incurring gift taxes. If you’re married or have a partner, that person can also gift $15,000. That’s true of grandparents and other friends and relatives as well.

You can open a guardian account (a joint with survivorship account) for each child. In that case you are the owner of the account although your child could make the decisions. Earnings are taxed at your rate.

You can also open an UTMA (for Uniform Transfers to Minors Act) custodial account. The child owns the account and you control it until he or she reaches the age of majority, which is 18 in the state of Maine. Taxable earnings are taxed at your rate until the child is 19 or 24 if he or she is a full-time student.

If your child has earned income, you can open a tax-deferred or tax-free Roth IRA in the child’s name. The contribution limit is $6,000 in 2019, or as much as the child earns if it is less than that amount.

One word of caution: If you want to teach your children valuable lessons about money, the keys are being committed to the approach you adopt and knowing what you want to accomplish by using it. Otherwise it’s unlikely to work for very long, whatever your good intentions.