What's the best and most flexible type of savings/investment account for a minor?
October 19, 2005 3:45 PM Subscribe
What's the best and most flexible type of savings/college fund account for a minor?
I want to start my 14 year old brother on the road to financial responsibility. He has a few hundred dollars saved from his allowance, and I want him to learn how to manage his money. He should have access to the money if needed, but the primary purpose would be to fund his college expenses.
I'd want to be the guardian of this account, which I could then hand over to him when he turns 18. My parents are very financially unsavvy and frankly, I don't trust them to set up any sort of savings for him. So I'm very hesitant to let them be in control, but I know it's probably be a lot easier if the account were jointly in their name. (And I'm not sure what risks I'd be undertaking, if any, by having the account be in my name.)
So what can this big sister do to make sure her brother's future is being properly prepared for?
I want to start my 14 year old brother on the road to financial responsibility. He has a few hundred dollars saved from his allowance, and I want him to learn how to manage his money. He should have access to the money if needed, but the primary purpose would be to fund his college expenses.
I'd want to be the guardian of this account, which I could then hand over to him when he turns 18. My parents are very financially unsavvy and frankly, I don't trust them to set up any sort of savings for him. So I'm very hesitant to let them be in control, but I know it's probably be a lot easier if the account were jointly in their name. (And I'm not sure what risks I'd be undertaking, if any, by having the account be in my name.)
So what can this big sister do to make sure her brother's future is being properly prepared for?
Trust funds are great if you have at least six figures to place in the trust. Otherwise, you can open an UTMA account . You would remain custodian of the account until he turns 21 (assuming you both live in Texas). Keep in mind that once you put money into the account, it is his to spend at 21, on whatever he wants.
However, if you would like to keep control over the money if he doesn't go to college, I might suggest a Section 529 plan.
posted by Kibbutz at 4:28 PM on October 19, 2005
However, if you would like to keep control over the money if he doesn't go to college, I might suggest a Section 529 plan.
posted by Kibbutz at 4:28 PM on October 19, 2005
You may want to keep it in your name if he will be applying for any need based scholarships or grants. That way he has it to use while in college, but not necessarily for college.
posted by blackkar at 5:05 PM on October 19, 2005
posted by blackkar at 5:05 PM on October 19, 2005
This thread is closed to new comments.
posted by clarahamster at 3:56 PM on October 19, 2005