<p>We will be tapping my daughters' accounts this year. The brokerage firm will send checks for requested amounts to my mother, who is the custodian. She must deposit the checks into her own account. She will send personal checks to me, one for each daughter. I will deposit them into my checking account. I will then use the amounts to pay college costs. What kind of record keeping do I need to do to make it clear that the amounts were used for college? Is it sufficient to have copies of checks going to the school that are equal or larger in amount than the amount of the checks sent to me by my mom? Can we still use the tuition pay plan if we're dealing with custodial account contributions?
Thank you.</p>
<p>Funds in UTMAs are owned by the minor beneficiary (the student) and can be used for anything that benefits him or her. You don’t need to track that these funds are used for college. Maybe you’re confusing UTMAs with 529s, which do need to be used for qualified higher education expenses?</p>
<p>Can your mother set up a direct transfer from the UTMA to your checking account? That will eliminate a couple of unnecessary steps.</p>
<p>You can use a tuition pay plan (are you thinking of the Sallie Mae one?) regardless of where the funds come from.</p>
<p>It’s possible that the broker’s administrative assistant said that we should make sure that the payments are used for our daughters, versus making sure they’re used for school. Thanks for that clarification. I’ll ask about the direct transfer. That would certainly be nice. I want to save her work; she’s 83 and has already made her contribution by being so generous to her grandchildren!</p>