This may be a little out of range for College Confidential but I’m hoping someone has some useful thoughts.
My dad passed recently, and I’m the executor if his estate. He left most of his assets for my mom’s benefit, but each grandchild is also getting a small amount, which will likely come to 3-4K. One grandchild is still a HS student, the rest are adults. The will states that funds to minors should be put in trust, but stipulates that if amounts are too small to warrant a trust, they don’t have to be. Attorney says I have to put the money for this grandchild into a UTMA account for him. I asked about putting it into a 529 for college instead, since that’s more favorable for financial aid purposes, but the lawyer said no, because the money in a 529 doesn’t actually belong to the child, which makes sense.
Without jumping through too many hoops, would it be appropriate for the child’s parents to present me with receipts for funds spent on that child up to the amount of the bequest, and then I could “pay back” those funds from the bequest directly to the parents, to put into a 529? I will obviously check with the estate attorney before doing anything tricky, but talking to him is $350/hour so I was hoping to understand the landscape as well as possible before opening that conversation.
Why not just put it in a UTMA? If parents are concerned about financial aid they could covert the UTMA to a custodial 529. Maybe the hs kid wants to backpack in Europe for a summer or do a service trip or needs a car and the UTMA would be better for them.
The impact of 3k in the kids account is not worth a minute of the lawyers time. Kid may end up at a college which does not meet need; kid may end up at the Naval Academy. Put it in an UTMA at Vanguard and don’t spend time worrying about it.
The lawyer obviously doesn’t know a lot about 529 plans. There is such a thing as a UTMA 529, also known as a custodial 529, which is owned by the minor beneficiary just as a regular UTMA account is owned by the minor beneficiary. Until the minor/beneficiary/account owner reaches the state age of majority, the account is managed for the benefit of the minor by an adult custodian. It still counts as a parent asset for FAFSA; treatment on Profile will depend on each school’s policy.
That amount is too small to warrant a trust or any atty time! Just give it to the child. That money is gone with one computer, one cell phone, and some clothing.
Why not just put it in a UTMA? If parents are concerned about financial aid they could covert the UTMA to a custodial 529. Maybe the hs kid wants to backpack in Europe for a summer or do a service trip or needs a car and the UTMA would be better for them.
You set up an UGMA UTMA account for a child or grandchild several years ago. Learn why you might want to convert it to a 529 plan.If you don’t want the money in account 529 to count towards your college financial aid assessment, you can deposit the money into a UTMA account and then transfer the account to your child. However, you must make sure that your lawyer gives you accurate advice on this matter.
