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Thanks in advance for any insight and advise you may offer.

My husband and I have been retired for 5 years. All of our assets are in a trust, except for $50k i recently received in an injury settlement.

We have 5 grandchildren from 3 of our 4 children. the three eldest grandchildren have stable parents with good income for their childrens current needs and college. The two youngest grandchildren do not have a stable environment or income. Currently we give to the grandchildren equally - gifts, clothes, uniforms, special interests, and career prep costs.

the two youngest live near us, and spend the most time with us. I want to set aside money for the youngest grandkids college. they are 7 and in the second grade. i have discussed this idea with my husband and their mom. Husband acknowledges their need is greater, but thinks we should keep the equality rule. Mom is concerned that putting money in their name and social security number would limit any grants or scholarships they might obtain. i don't care what the other parents think about this idea, and don't plan to get their input or approval. how do i approach this plan? do i set aside money in the trust? do i use the $40k outside the trust to start a fund, and transfer money from the trust to the fund? what else do i need to consider?
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how do i approach this plan?

I suggest you take your question to the Paying for College board. Don't get hung up on the trust aspect. That's why you pay a lawyer. Your question is whether it's better to have the money in the child's name, your (or a trust's--same difference) name, or perhaps, a 529 tuition plan.

On a strictly "life doesn't always play out the way we think it will" front, I wouldn't put it in the child's name since once the child reaches majority (s)he can blow it on Twinkies if the mood strikes.

Phil
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<<Husband acknowledges their need is greater, but thinks we should keep the equality rule. >>


You pose some interesting questions. I'll be glad to see the comments that are posted.


Personally, I have no problems playing "favorites" as you describe, especially if you can't afford or aren't interested in making equal gifts to all.

Helping out those whose need is greatest is a good reason to help those two children, in my view.

Putting the money in their name is probably a mistake, since it gives them an opportunity to spend the money frivolously. Also, it's always possible one may not survive to adulthood or may choose something else other than college.

On the other hand, trusts for relatively small amounts of money can soak up a lot of expenses as the years go by.

In my own case, I planned to contribute money towards the school costs of my two nephews, but my brother refused the offer two years ago and this year, saying that he and his wife were able to and preferred to fund my older nephews schools themselves. He left open the possibility that they might find such a gift welcome next year when they will have two in college.


So you never know.



Seattle Pioneer
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I'm probably in the minority on this, but I wouldn't do anything specific with the money. I would keep it within your own investment portfolio or trust, or whatever you have under your ownership and control. When the time comes, you can give as you see fit based on the circumstances that exist at the time. If you are worried about being dead by that point in time, then you can set something up in your will, like a trust for each grandkid with whatever amount and limitations you think appropriate. I think this is better than setting up trusts now or setting aside money in their names in personal accounts. Just my two cents.
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Most States have a 529 Plan for college some are better than others.
Iowa has a very good one. Here is the web page for it https://collegesavingsiowa.s.upromise.com/ It has all the detail of the plan.
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the two youngest live near us, and spend the most time with us. I want to set aside money for the youngest grandkids college. they are 7 and in the second grade


Bless you for helping these kids out. Sounds like they need it.

First of all, find out if your state has a 529 college savings plan. Most do. If so, that would be the way to save for college.

One downside: they'd have to attend college in your state, I believe.

Please let us know what you decide and how you're making out.
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You don't have to use your state's 529 plan or attend school in your state. You can pick any plan from anywhere in the nation. Clark Howard has a good explanation on his site and lists the best and worst plans. He also has a good explanation of 529's and mentions a Coverdell account as another option.

http://clarkhoward.com/liveweb/shownotes/category/7/76/215/3...

http://clarkhoward.com/liveweb/shownotes/2009/05/14/15754/

Carol
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thanks to EVERYONE for your replies. I wrote this inquiry because we will be talking to our trust manager next month. I need to be prepared and think this through. I will continue to gather all your ideas and suggestions, research what I can, and discuss this with him before making any decisions. your ideas had suggestions have helped me think all this through. i agree putting money in their name without any oversight is risky. We can't trust bank and insurance execs to do the right thing, I don't think an 18 year old is any more trustworthy. I can't put their parents in charge of ANY significant amounts of money for them (long story). does any of the education trusts like the 529s guarantee oversight?

no matter what happens to me or our retirement savings, i want to assure the money is there for those boys. i am also concerned about blending the insurance settlement money with our regular retirement savings. my husband views that money as 'play money' and might just decide to play with it (which he did with all of his parents inheritance) OR decide to split the money among all of the kids equally (he still believes the equal distribution of education money is the way to go).
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<<(he still believes the equal distribution of education money is the way to go).

>>


That's not an unreasonable idea. I happen to have my own biases, but there's a reasonable argument not to penalize families that have earned and saved enough to put their children through school.

And families that do that may be socked for much higher out of pocket costs from colleges, while those that don't have assets may get subsidies.


Seattle Pioneer
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