Trust fund and FA

sk8rmom
Wed, 22 Jul 2009 09:46:09 +0000

She is custodian of $35K contributed by our parents and held in trust for her son, and has not touched it as it is set aside for college



It’s not clear from drb’s description whether the trust limits the use of funds to educational expenses, her subsequent questions about spending down seems to imply that it does not.

I see this as a situation of low-income parents, unwilling or unable to generate sufficient income to pay living expenses or perhaps simply having a lifestyle above their means. Either way, that’s really what they need to address to decide whether consider spending this wonderful gift now to enrich the child’s life while he is still a child or to hold onto it for a future opportunity. I think I would be reluctant to spend it on day to day living expenses, such as food and clothing, unless the child is really lacking and there is truly no other way, short of putting it on the credit card, to provide for him. I would consider summer programs and other experiences that would enrich his life now, perhaps spending the earnings on the principal for these purposes.

It doesn’t have to be an “all or nothing” proposition, but can be a careful decision of what’s in her son’s best interest as opportunities arise.