<p>I think the intent of the account originator needs to be considered.
I know my in-laws wanted the $ to help fund college, not a vehicle or vacation, but they put gifts in the kids’ names to avoid the taxes. The were not aware that the kids could access this money before they finished school. Nor did they realize the implications that money could have on financial aid.
We were advised to stop saving in the kids’ names and to spend that money on them. The money we spent (for their camps, select travel sports, personal laptops, etc.) came from their accounts and was immediately reinvested in a ‘family’ account which we use for their education.</p>