Many debtors filing for Chapter 7 or Chapter 13 bankruptcy may have bank accounts open for their children and want to know if a creditor can seize the money in those accounts during a bankruptcy. Well, the answer is no, a child’s bank account cannot become the property of the bankruptcy estate.

But that is only true if the child’s bank account was setup properly. If the account was not setup properly, the debtor will have to prove to the bankruptcy trustee that the account was truly for the child. For example, if you opened an account under your name and pay for the child’s expenses and the general expenses of the household, that account would probably not be considered exclusively for the child’s benefit by the bankruptcy trustee.

If you did not setup your child’s bank account properly, no matter what type of proof you present the bankruptcy court be prepared for the possibility that the account won’t be protected from liquidation during a Chapter 7 or Chapter 13 bankruptcy. But if your child’s bank account is properly setup, according to the Uniform Gift To Minors Act (UGTMA) creditors cannot seize money in that account during a bankruptcy.

Under the UGTMA a gift to a minor is irrevocable, it cannot be taken away from them and becomes the property of the child once the child reaches adulthood.