[Michele]

It anyone familiar with best FIRE practices for guardianship accounts?

We lost my dad suddenly and he left 10% to each grandchild, including my son.

My son is 6. I think he will get somewhere between $50,000 and $60,000.

The attorney said it has to go into a guardianship account and there are limited ways you can invest those.

He said a 529 is one option.

I have $12,000 in a 529 right now.

But I know it’s not ideal to have too much money in my son’s name for colleges.

I will turn 61 right after he graduates high school.

I am his only parent, so I need to plan carefully.

Do you have any advice for ways to invest a guardianship that will be most beneficial?

Mahalo and much aloha from Hawaii! Michele

[Elizabeth]

For a dependent student, a custodial 529 plan in the student’s name, with the parent only serving as the custodian, will count as a parent asset on FAFSA for federal student aid.

This is different than other custodial/ UTMA accounts which would be a student asset.

A parent asset is only assessed up to 5.64% towards the Student Aid Index (SAI) as opposed to a student asset that is assessed at 20%.

You cannot put it into an account with your name as the owner as that would be misappropriation of the child’s funds.

[Alex]

If you’re worried about getting financial aid based on need you really have to be very poor to get any aid.

It’s wonderful your dad left a gift for his grandchildren.

You can open a utma account and because your son is young still I’d invest it in a low cost s and p 500 index fund such as voo which is vanguard’s version.

[Susan]

In NJ you have to post a bond for minors which was costly. I left the kids money in the account to avoid this (they were 14 and 16 when my mom passed).

Transferred in their name at 18.

They are taking RMD now, goes straight to a Roth.

[Chris]

50k invest from that earlier of an age should be a significant amount of money when it’s time for college.

I wouldn’t worry about what ifs.

What if he never goes to college?

Or he gets a scholarship or joins the military.

Grow that money as much as you can and if he wants to spend it on college he’s got a college fund.

I’m no expert but that’s my opinion.

[Judy]

Rules could change in 12 years. 529 is a good option if allowed. Roth conversion rule currently in place could be an option if still in place 15 years from now.

[Mark]

Check with attorney again. Every state is different, but I have many more options for clients in Florida

[Lindsey]

My nephews both have guardianship accounts from my sister (their mom) who passed away.

In the state of TN we are only allowed to invest the money in fixed investments for them — so CDs or US treasury bonds.

This is at the direction of the court.

Not at all how I would choose to invest for them but we don’t get a choice.

[Author]

Posts