<p>kelseyg: I know your post was based on certain assumptions…only quoted to bounce off of your point, not refute it :)</p>
<p>I just have to believe that if the younger child’s motivations really are selfish or unreasonable (bear in mind that “expensive private” does not necessarily mean “prestigious”), then he would be made to change his plan or to take responsibility for it, and transferring funds would be a non-issue. But no matter how I fill in all the unknowns, I struggle to get this situation so ethically muddled as to warrant a letter to the NYTimes. It’s only the unknowns that are keeping it interesting. Perhaps it just boils down to the type of accounts + the family’s dynamics, or maybe I’m seeing it as more black and white than it should be. Regardless, it IS a good situation to ponder, I just find it way too vague to really judge.</p>
<p>I am not truly confident on all the legal issues here, but if this were my case, I would have no problem asking #1 for a low interest loan. This way, the money remains his and he is making some return and knowing that he is helping out family. Not a gift, but an invertment. #1 also must realize that this money did not just appear out of the blue and, if I read correctly, did not earn that money all himself. Therefore, putting together a low interest loan package everyone wins to some extent.</p>
<p>Let’s muddy the waters further with a hypothetical: Older, slacker son went to state school and majored in “partying”, younger child is a brilliant 2400/4.0 Intel finalist who wants to go to HYPS and do MD/PhD.</p>
<p>We have 529 accounts for both kids. Both with the same amounts. We were paying out of pocket for our son (the older child) while he was in CC thinking to let the fund grow for when he moved to a 4 year school. He dropped out, went back and has dropped out again . Sad but not surprising as he has never enjoyed academics and has some learning disabilities that make school tough for him despite having a very high IQ. Our daughter (the younger child) has excellent scholarships plus some grants and a little bit in subsidized loans. Her 529 account is also currently untouched. But her plan is to go to medical school. If that happens we will transfer the 529 money into her name to help pay for it. (though if our son goes back to school or a vocational type training, which I think would suit him, then we would use the money on him). If she does not go to med or grad school we will pay off her loans. If there is money left we will probably pay the penalties and keep it. We are retired and not amazingly well off.</p>
<p>We put the money aside for education. If it is not used for that we can definitely use it. They will get what is left eventually anyway. :D</p>
<p>The legalities are different with a UGMA account. The ethics are a little more blurry. Probably a lot depends on what the expectations were and how/if they were communicated to the kids. Ours do not regard the 529 account money as theirs to do with what they want. I am not sure they are even aware of them. And of course we are not talking about anything like those $ numbers in our case.</p>
<p>Ethically, the money is the older kids and he shouldn’t have to share. The problem arose because the money should never have been set up that way in the first place. </p>
<p>I was the beneficiary of an educational trust that was one large lump of money for three of us to only be used for education. When the youngest turned 28 years old, if any was left it was split equally three ways. I chose a state school. My brother chose a trade school. My sister chose both an expensive LAC and a private grad school. My sister sucked almost all the money out of that account, but neither my brother nor I felt entitled to it. We could have gone that route, too.</p>
. Sad but not surprising as he has never enjoyed academics and has some learning disabilities that make school tough for him despite having a very high IQ. Our daughter (the younger child) has excellent scholarships plus some grants and a little bit in subsidized loans. Her 529 account is also currently untouched. But her plan is to go to medical school. If that happens we will transfer the 529 money into her name to help pay for it. (though if our son goes back to school or a vocational type training, which I think would suit him, then we would use the money on him). If she does not go to med or grad school we will pay off her loans. If there is money left we will probably pay the penalties and keep it. We are retired and not amazingly well off.</p>