Children’s savings account becomes available when your child turns 18: ‘Exciting for many parents’ | Money

By Marloe van der Schrier

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Jan 14, 2023 at 1:14 PM

For many parents it is on the list at birth: opening a savings account for your child. Almost every bank has a special children’s savings account. They are often free and usually have a slightly higher interest rate than regular accounts. How exactly does that work?

Every father, mother or maybe grandpa and grandma wants his or her (grand) children to have a good financial life later on. “It is then wise to set aside money for your children from birth,” says Annelou van Noort. She is a pocket money expert and advises parents and children on money matters.

“Blink your eyes three times and they are eighteen years old. And then it is nice to be able to contribute to the study, buying a house or other dreams and goals that your child has later. Every little bit helps,” she says .

The conditions of a children’s savings account

Many parents open a special children’s savings account for their daughter or son. These accounts are often free and the interest is often slightly higher than on a regular account. Banks often encourage it to close its account. “Practice shows that once you are with a bank, you do not switch so quickly and remain a customer for a very long time,” explains Tjarko Denekamp, ​​gift and inheritance specialist at ABN AMRO MeesPierson. At some banks it costs money to withdraw money from a children’s savings account in the meantime.

How much interest do you get at the major banks on the children’s savings accounts?

ING: 0.30 percent on a balance up to EUR 25,000.ABN AMRO: 0.25 percent base interest on a balance up to EUR 1,000,000, 0.15 percent bonus interest.Rabobank: 0.35 percent on a balance up to EUR 100,000.SNS Bank: 0.35 percent.

As a parent, you manage your children’s money in this way until they turn eighteen. “Parents have the authority to manage their children’s assets as long as the child is a minor,” says Denekamp. The amount in their bank accounts is included in the parents’ assets for income tax purposes. Parents are allowed to donate 6,035 euros tax-free to their child per year.

From the age of eighteen, a child is financially independent

Over the years, the amount in such a savings account can increase considerably. When your child turns 18, all those euros will be in your child’s name. Your son or daughter can do what he or she wants with it and things have turned around: as a parent you need permission to watch. “There is nothing wrong with that if your child can handle money well,” says Van Noort. “But it’s still exciting for many parents.”

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Some children also say: this is not for me yet, put it aside for a while.

Annelou van Noort, pocket money expert

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“In practice, young people still need help with this. The brain and the brain are not yet fully developed at that age and they have not experienced many situations before. It is a lot that suddenly comes at them,” says Van North. “It is wise to talk about it with your child before the eighteenth birthday and how they spend such an amount. Some children also say: this is not for me yet, just put it aside for me.”

Denekamp: “It is also possible that children take a different path and do something impulsive that you, as a parent, had not thought of the amount for. As a parent, you have to think in advance how you want to deal with it.”

Save on your own account

“In that case, you can also consider keeping the money in your own account and setting it aside, so that it is not automatically the responsibility of your child on the 18th,” says Denekamp. Then you donate it if they actually need money for an education, house or driving lessons.

“In most cases, this does not pose a problem with the gift exemption,” says Denekamp. Are the amounts greater than the exempt annual amount of 6,035 euros? Or the one-off applicable increased exemption of 28,947 euros? Then you pay gift tax: 10 percent if you donate to children, 18 percent if you give money to grandchildren.

There is also the possibility of extending the age limit by ‘donating under administration’. In that case, you determine before you start saving when your child has access to the money. For example, when your child has finished his education or turns 23. Only side note: a child can object to the court and get control over the money. Your son or daughter must be of age for such an objection and the regime must have run for at least five years.

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Beeld: Getty Images

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