529 account question

[moneymom]

I have been saving in a 529 account for my former foster daughter.  I just suddenly realized that because she is no longer my foster child, I cannot use a 529 account for her??  Does anyone happen to know a loop hole on how I might possibly be able to use it for her?  I contributed after she was no longer my foster child because she was still staying with us and I just felt like she was one of our kids and I wasn't thinking!  I could use the money I saved for her for my other daughter however I would love it if I could find a way to still contribute for our former foster.  Any ideas?  

EDIT:  

And tell me if you think my idea is criminal lol -

I was thinking if we wait until she turns 17, which is in many years, we could ask her dad if we could adopt her just for financial reasons. If we adopted her at 17, she would have access to all that educational money. Also, she could go on our medical insurance until she ages out (which is 24 I think??). Is this a crazy idea?! She is on state medical insurance and isn't getting all the medical care that would be optimal for her. (However she does get very basic care).  Basically we just want to help her in any way possible when she grows up.  She will likely need all sorts of help.

[ArchietheDragon]

May 19, 2016 12:03:35 GMT -5 moneymom said:

I have been saving in a 529 account for my former foster daughter.  I just suddenly realized that because she is no longer my foster child, I cannot use a 529 account for her??  Does anyone happen to know a loop hole on how I might possibly be able to use it for her?  I contributed after she was no longer my foster child because she was still staying with us and I just felt like she was one of our kids and I wasn't thinking!  I could use the money I saved for her for my other daughter however I would love it if I could find a way to still contribute for our former foster.  Any ideas?  

EDIT:  

And tell me if you think my idea is criminal lol -

I was thinking if we wait until she turns 17, which is in many years, we could ask her dad if we could adopt her just for financial reasons. If we adopted her at 17, she would have access to all that educational money. Also, she could go on our medical insurance until she ages out (which is 24 I think??). Is this a crazy idea?! She is on state medical insurance and isn't getting all the medical care that would be optimal for her. (However she does get very basic care).  Basically we just want to help her in any way possible when she grows up.  She will likely need all sorts of help.

It is your lucky day.  You can setup a 529 for anyone you choose.  That person does not have to be your offspring or foster offspring, even.    Keep contributing to it. 

[Deleted]

If you did manage to adopt her, your income would impact her financial aid for college.   She will probably do much better as a ward of the state when it comes to grants, etc.

[moneymom]

May 19, 2016 13:44:22 GMT -5 ArchietheDragon said:

May 19, 2016 12:03:35 GMT -5 moneymom said:

I have been saving in a 529 account for my former foster daughter.  I just suddenly realized that because she is no longer my foster child, I cannot use a 529 account for her??  Does anyone happen to know a loop hole on how I might possibly be able to use it for her?  I contributed after she was no longer my foster child because she was still staying with us and I just felt like she was one of our kids and I wasn't thinking!  I could use the money I saved for her for my other daughter however I would love it if I could find a way to still contribute for our former foster.  Any ideas?  

EDIT:  

And tell me if you think my idea is criminal lol -

I was thinking if we wait until she turns 17, which is in many years, we could ask her dad if we could adopt her just for financial reasons. If we adopted her at 17, she would have access to all that educational money. Also, she could go on our medical insurance until she ages out (which is 24 I think??). Is this a crazy idea?! She is on state medical insurance and isn't getting all the medical care that would be optimal for her. (However she does get very basic care).  Basically we just want to help her in any way possible when she grows up.  She will likely need all sorts of help.

It is your lucky day.  You can setup a 529 for anyone you choose.  That person does not have to be your offspring or foster offspring, even.    Keep contributing to it. 

oh wow!!  That is what I originally thought but then I thought recently I read it's only good for children, step, foster, adopted, nieces, nephews and grandchildren.  I thought that meant all else were excluded.  

[moneymom]

May 19, 2016 14:07:56 GMT -5 @bamafan1954 said:

If you did manage to adopt her, your income would impact her financial aid for college.   She will probably do much better as a ward of the state when it comes to grants, etc.

very good point.  It probably would do more harm than good, and take an emotional toll on some involved.  However she won't be a ward of the state.  Her parents have custody.  They are just unable to provide anything for her other than what welfare will provide.

[sesfw]

MM you are a very kind and caring person ........... 

Wish I could open 529s for our g-g-kids but the parents say no .......... They want control of the funds

[Deleted]

May 20, 2016 10:56:33 GMT -5 sesfw said:

MM you are a very kind and caring person ........... 

Wish I could open 529s for our g-g-kids but the parents say no .......... They want control of the funds

So are you just giving the parents the money now?  I think the one saving it should have control of the funds, but that's just me. I would say, "guess you're not getting any money then!", or just invest in a taxable account earmarked for them. 

[jitterbug]

May 20, 2016 10:56:33 GMT -5 sesfw said:

MM you are a very kind and caring person ........... 

Wish I could open 529s for our g-g-kids but the parents say no .......... They want control of the funds

My son was the recipient of a 529 from his grandma that I didn't even know existed until right before his high school graduation! She DID have access to his social security number, though, as we knew she was making some investments for him - we just didn't know what.  So can't you do it without their permission?

Or you could do what we have done for our own grandson....we've opened a mutual fund that is in our name, but is mentally marked as our grandson's.  (We need to change it so he's the beneficiary if something happens to us).  It's not in a 529 - as not all kids are college bound and if he turns out to be one of those kids - but still a hard working kid - we want some flexibility in how and when we gift it to him. The grandma above also gifted our son savings bonds that ended up being the down payment for his house and we like that idea, too.  And basically, instead of gifting him lots of crap for his birthday and Christmas....we buy a little crap and the rest is gifted into this investment.  His parents know what we are doing, but don't have access to the account or it's balance.

[gooddecisions]

May 20, 2016 14:22:24 GMT -5 jitterbug said:

May 20, 2016 10:56:33 GMT -5 sesfw said:

MM you are a very kind and caring person ........... 

Wish I could open 529s for our g-g-kids but the parents say no .......... They want control of the funds

My son was the recipient of a 529 from his grandma that I didn't even know existed until right before his high school graduation! She DID have access to his social security number, though, as we knew she was making some investments for him - we just didn't know what.  So can't you do it without their permission?

Or you could do what we have done for our own grandson....we've opened a mutual fund that is in our name, but is mentally marked as our grandson's.  (We need to change it so he's the beneficiary if something happens to us).  It's not in a 529 - as not all kids are college bound and if he turns out to be one of those kids - but still a hard working kid - we want some flexibility in how and when we gift it to him. The grandma above also gifted our son savings bonds that ended up being the down payment for his house and we like that idea, too.  And basically, instead of gifting him lots of crap for his birthday and Christmas....we buy a little crap and the rest is gifted into this investment.  His parents know what we are doing, but don't have access to the account or it's balance.

My parents have done that for my kids and I think it's great. They send something little in the mail but have commented once or twice, that their real gift is what they've added to their college fund. They are little still 4, 2 and newborn. My husband is very frustrated by it however, he wants complete transparency and doesn't want it to jeopardize any funding down the line. I feel we should be appreciative and gracious about any money they want to contribute and if they don't feel comfortable with transparency, then so be it. Also, I don't want to financially plan on relying on it. If they need to raid the funds for health reasons, then that's what they need to do.

[Deleted]

My grandkids have 529s that I set up for them. It's not much money because there are quite a few of them.  But that's fine. I still enjoy contributing more to their 529 than I do buying them yet another toy.

When you have four or five young kids (each), believe that you have every toy for every age. 

Even if it ends up being just enough for a laptop to start their college career with, I will be happy I did it. 

[sesfw]

I would say, "guess you're not getting any money then!

This is exactly what we have done.  I had all the paperwork filled out but the parents refused to give SS # so .......... I hope the kids never find out what their parents have done to them.

There is no way I'm giving that kind of $$$$$ to an 18 yr old without strings.

[resolution]

May 20, 2016 15:52:05 GMT -5 gooddecisions said:

May 20, 2016 14:22:24 GMT -5 jitterbug said:

My son was the recipient of a 529 from his grandma that I didn't even know existed until right before his high school graduation! She DID have access to his social security number, though, as we knew she was making some investments for him - we just didn't know what.  So can't you do it without their permission?

Or you could do what we have done for our own grandson....we've opened a mutual fund that is in our name, but is mentally marked as our grandson's.  (We need to change it so he's the beneficiary if something happens to us).  It's not in a 529 - as not all kids are college bound and if he turns out to be one of those kids - but still a hard working kid - we want some flexibility in how and when we gift it to him. The grandma above also gifted our son savings bonds that ended up being the down payment for his house and we like that idea, too.  And basically, instead of gifting him lots of crap for his birthday and Christmas....we buy a little crap and the rest is gifted into this investment.  His parents know what we are doing, but don't have access to the account or it's balance.

My parents have done that for my kids and I think it's great. They send something little in the mail but have commented once or twice, that their real gift is what they've added to their college fund. They are little still 4, 2 and newborn. My husband is very frustrated by it however, he wants complete transparency and doesn't want it to jeopardize any funding down the line. I feel we should be appreciative and gracious about any money they want to contribute and if they don't feel comfortable with transparency, then so be it. Also, I don't want to financially plan on relying on it. If they need to raid the funds for health reasons, then that's what they need to do.

If the grandparents are the owners and the children are beneficiaries, the asset shouldn't count against their financial aid as an asset. Any amount that is withdrawn to pay for their schooling would count as their income for the following year's financial aid package.

[lund]

gooddecisions said:
....My husband is very frustrated by it however, he wants complete transparency and doesn't want it to jeopardize any funding down the line.....

This I don't understand at all!
With the grandparents as owners, it is not included among the parental assets (for a FAFSA or similar).
If the child gets a scholarship, veteran's earned educational benefits, or other form of paid-for education, the money and earnings can be paid out without penalties.
If the grandparents and the parents would save more than college would cost, the money is not lost but can be used for a higher degree or re-assigned (to the next sibling or first cousin).
If the child is not college material, the 529 can also be used for vocational school.


I like Gooddecisions's attitude! IMHO it is a great gift that hopefully will help the youngster getting well started in life.


I only see one potential problem, and that is if the grandparents would pass after putting substantially more in one child's 529 than in a sibling's, or having to use a younger sibling's 529 for health reasons. Getting less may mean a more limited choice of colleges.
But this is one of the times where I think that the parents can gift the one getting less the difference, making it more even.

[Deleted]

Anything removed from grandparent held 529 does count as student income for next year fafsa. So could be an issue there. Can use it in last years if not large $. My father gives me the kids 529 statements at least once a year. 

I do think it's important to know how much is there to advise and prepare. Also, I personally asked dad not you put any more in, because I actually don't want them to think they can bum around for 6 years and or have no stake in the game so to speak. I appreciate the gift. So much! But I'd be a little annoyed if I didn't know how much or etc. 

[Deleted]

My Dad set up UGMA accounts for each of my kids when they were born.  From a financial aid aspect it's about the worst place to have money saved for college as it's all in the kid's name.  But most aid these days is in the form of loans anyhow, and if it does end up that it reduces a grant 40 cents on the dollar...well...we're still up 60 cents.    I am so not complaining. 

I do wish I knew how much was in it though.  They would tell me if I asked, but I'm uncomfortable doing so.  About 4 years ago they did say at that time it was around 20K.  It's invested in a Science and Tech fund which gives me the heebie jeebies.  I was one of those that lost a crap ton in tech funds back in the late 90's.