@thumper1 wrote: For example, my mother had me as a joint holder on all of her bank accounts…the money was not mine, and she got the 1098 I statements. That money did not go on my kid’s FAFSA forms. It wasn’t my money. But in the event of her death, the accounts became mine. I’m not sure what that was called.
@thumper1 That’s a Transfer On Death designation. It keeps the account out of the estate, out of probate, and out of danger from claims against the estate. It is her account while she is living, but when she dies you provide the death certificate to the fund manager and the fund ownership transfers directly to you. That can be set up to be divided among multiple recipients, and it works for IRA/retirement accounts as well as standard brokerage accounts. In my family’s case, the funds that were transferred via TOD changed ownership within 5 weeks with the biggest delay being getting the estate paperwork set up. Funds that went through probate did not transfer completely for over a year. For any size of estate, that makes a difference, especially when you are relying on those funds to reimburse you for the cost of death expenses.
My sister did this for my kids. She set up auto deduct from her paycheck and the money went into accounts at her credit union. Both my name and my kids were on the account. She also did this for a couple of my nieces. It was greatly appreciated. There were no financial aid issues as both families are full pay. Not that this was even thought about when the kids were born.
What has become an issue is that she did this while she worked for one employer for many years. When she left that job the contributions stopped. What she didn’t do and is a bone of contention with another sibling is that one of my siblings had her children later and did not get an account set up for them. My generous sister is now trying to figure out what the older nieces and nephew received so she can gift the other nieces and nephews the same amount.
So moral of the story is if you have more nieces and nephews in the future make sure you are equally as generous.
Here my story about the kid getting the money at 18 (must States are 21 now). Daughter had about $20,000 in an UTMA account that dad put there for college. Daughter turns 18. Calls the financial advisor and asks for a lump sum check with specific instructions to not call dad (which he is legally obligated to follow). Dad calls advisor a couple weeks later and lets him know that daughter emptied her college account to buy hey boyfriend a new car. (Thankfully this wasn’t me, but I know the people involved this isn’t just a hypothetical)
You think your kids (or niblings) wouldn’t be that stupid. But think back to some of the prudent decisions you made at 18 or even 21. This is why my kids have less than $5,000 in accounts like that. $30,000 plus growth could easily be $50,000 plus or more. That’s a lot to give a kid without at least requiring a phone call to get your opinion.
Plus if they get financial aid that’s going to hurt the about they can get.
@romanigypsyeyes - Your generosity is inspirational. But posts #41 and #42 should give you pause.
The advice we were given by our financial advisor was to create a separate account - that we would ‘know’ but not identify was for our minors (offspring and niblings, as it were). The account would remain ours to distribute at a time(s) and as we saw fit, eg. summer camp experience, college, first car purchase, first home purchase. This would be an additional account in our portfolio - This account would be referenced in our estate documents as to be divided among our designees (if we hadn’t already dispersed the proceeds).
But the most important piece of advice he gave is that we didn’t want to create accounts that would be inaccessible to us in the event we experienced hardship times.
My own kids are now grown, but I will help 2 young nieces with their education from that account, and should I live long enough, my grandkids, too.