Federal Law states that banks must check the credentials of the person in whose name an account is being opened. This means that you cannot open a certificate of deposit account for some one and bestow it upon them as a gift.
In case of minors, however, the rule is different. Since a person has to be at least 18 years to be able to sign legal documents, you can sign and open an account or a CD for your child with the help of gift funds. Given below are the steps that you should follow should you wish to present a child with certificate of deposit.
1. Talk To The Bank
The first step that you should take is to contact various banks and financial institutions and find out the rates offered by them on the CD. You can invest in long-term certificate of deposit, as you will be opening the account for your child. Now follow the steps as given below –
a) Find out about the minimum amount that you have to needs deposit before going ahead with the process.
b) Ensure that you are financially capable of paying the amount required and then opt for the bank that is offering the highest rate. You can check the CD rates at ComplexSearch.
c) You can also check out the rates on the short term CDs, as they will help you earn quickly and you can use the money for other investments.
2. Furnish All Information
After you have the necessary information, you will have to furnish the bank with the following documents –
a) Your driver’s license, passport, your Social Security number and a check for the initial deposit that will be paid to the child to whom are gifting the CD.
b) You will also have to provide the bank with the child’s full name, age and address proof and the Social Security number.
3. Read Fine Print Carefully
It is necessary that you read all documents carefully including the form and review it thoroughly so that there are no errors. Follow these steps for going through the documents –
a) When you open a Certificate of Deposit account, the bank will provide you with a disclosure document. This document contains the terms and conditions of the CD and contains all the information regarding the features of the CD, and the rate of interest you will earn.
b) Read this document carefully.
c) Ask the official to open the CD under UGMA and ensure that the bank lists you as a custodian or guardian of the account.
d) Check to see whether the time period of the CD and the rate of interest are correct and similar to the information given to you.
e) Sign the agreement and ask for a copy to keep in your records.
By gifting a Certificate of Deposit, you take a step towards securing your child’s future and therefore you should be clear about the terms and conditions to ensure that your child can reap the full benefit of it.