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Question & Answer
Question: Can we issue a certificate of deposit in the name of a minor alone? We have a social security number, but the child is only ten years old. The parents have just come into a bundle of money and want to put part of it in their child's name.
Answer: Unless your financial institution policy forbids it, we know of no prohibition to opening a CD in the name of a child, using the child's social security number- particularly if it is an automatic roll-over. Most institutions are delighted with this kind of purchase, as it is a long-term deposit.
This often happens in the case of estate planning. Each parent can give $10,000 to any one person in any one year. There is no tax benefit to either of the parents, but it moves the assets out of the parent's estate, and so reduces estate taxes.
Whatever interest is earned is credited to the social security number of the child named on the certificate.
Copyright © 1996 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 6, No. 6, 4/96
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