Did I do something wrong that I'm missing? Isn't college $ good?
December 27, 2014 1:50 PM   Subscribe

For Christmas, I decided to set up a 529 college savings account for my 7 month-old nephew. My sister and her husband flipped out, saying I am trying to use their child for tax deductions. I don't understand what I did wrong. Insight please?

I decided to set up a 529 college savings account with my 7 month-old nephew as the beneficiary, so that he won't have mountains of student loans when and if he gets to college/technical school. I planned on contributing to it for Christmases and birthdays. I live far from my family, so my sister called me on Christmas and screamed at me about how I am trying to use their child as a tax deduction and how dare I, etc. I really don't understand how the gift could offend.

There are no tax breaks for me. I did this because I want him to be able to get an education, and I didn't want to buy him toys or clothes since he already has so much. I am extremely hurt by her/their reaction, and really don't understand what I did wrong. Can anyone tell me?
posted by bolognius maximus to Human Relations (56 answers total) 5 users marked this as a favorite
Your sister and her husband are way, way, way out of line. You didn't do anything wrong, but it's possible that their reaction's symptomatic of something deeper going on. Maybe other Mefites can chime in and we can all try to figure out what it could possibly be.
posted by un petit cadeau at 1:55 PM on December 27, 2014 [50 favorites]

Is it possible that your sister and her husband just don't understand what this type of account is?

My daughter is currently reaping the benefits of such an account that my in-laws set up when she was born. It really is a huge benefit, and I think it's a very thoughtful gift.
posted by SuperSquirrel at 1:55 PM on December 27, 2014 [18 favorites]

AFAIK, you did nothing wrong. your contributions are not deductible, according to the IRS, so you get no tax benefits at all from this.

Your nephew, on the other hand, will be able to withdraw earnings without paying tax on them, as long as they are used for qualified educational expenses. That's a nice gift to him.

I suspect that your sister and brother-in-law are deeply confused about what 529 plans are and how they work. Or perhaps they are afraid that your gift will come with strings attached. In any case, the reaction seems over the top—is there any other source of tension between you?
posted by brianogilvie at 1:56 PM on December 27, 2014 [10 favorites]

Wow. You did nothing wrong. I'm guessing your sister has other issues which need to be addressed. You can reassure her that you're not taking a deduction, that the tax breaks are all theirs, and that you're thinking only of your nephew's education.
posted by Johnny Wallflower at 1:56 PM on December 27, 2014

Maybe because you retain control of the account (per this)? Apparently, "your investment grows tax-deferred," and you can remove the money from the account if you want while the beneficiary has no inherent rights to the money. But their reaction would then imply they think you will never give your nephew the money or something. I'm no tax expert, so maybe the accountants of AskMeFi can help you, but I think that sounds like a really thoughtful gift and your sister and brother-in-law are acting really inappropriately and rude.
posted by AppleTurnover at 1:56 PM on December 27, 2014 [1 favorite]

P.S. Some states do allow you to take a deduction for contributions to nieces' and nephews' accounts. This wouldn't apply to federal taxes, though. And in any case, why does it matter whether you get a deduction? It's still a gift to him that will earn tax-free income for his college expenses.
posted by brianogilvie at 1:58 PM on December 27, 2014 [8 favorites]

Just keep contributing and let them figure it out for themselves. Eventually they will bitch to someone who will put them in their place.

Maybe they misunderstood, and maybe they are gigantic assholes and their kid's going to need all the help he can get. It's a nice thing for you to do, and pretty traditional for an aunt or uncle or grandparents to do.
posted by Lyn Never at 1:58 PM on December 27, 2014 [27 favorites]

Your sister and brother-in-law are not rational. As you correctly understand, as the contributor, you get no tax benefit. Rather, your nephew gets the tax benefit because the funds grow tax-free and distributions are exempt from tax (at least federal income tax - state taxes vary). While you maintain control of the funds and their distribution, you would have to pay the taxes and a penalty if you were to use the funds on yourself, so there is no way this is of benefit to you. It is obvious that they do not understand this fact.

I think you did something very right. I think it would be also very right if you let your sister sink or swim on her own when it came to her child's education.
posted by Tanizaki at 1:59 PM on December 27, 2014 [3 favorites]

I don't think anyone outside of your family can pinpoint what you did "wrong." You gave a lovely (and fairly common) gift. Your sister's reaction is about something personal for her, not some social faux pas you committed.
posted by Meg_Murry at 1:59 PM on December 27, 2014 [4 favorites]

For the sake of keeping the peace, I would allow for the possibility they are confused about what kind of account this is. Some people have experiences with relatives parking money in their name to avoid taxes and they may have become overly suspicious.
posted by BibiRose at 2:07 PM on December 27, 2014 [12 favorites]

Well this is just a wild guess but could it be they're hypersensitive and erroneously feel criticized? "We never imagined thinking that far ahead but here's bolognius jumping in to pay for our little Elmo's college. He must think we're bad parents! Let's call him up and scream at him!"
posted by mono blanco at 2:18 PM on December 27, 2014 [19 favorites]

Yeah, wow, that's six kinds of fucked up. It used to be that people gave savings bonds to kids for Christmas and Birthdays, now it's a nice 529 account.

Perhaps send her a letter with information about the account. Say, "I'm not sure what I did wrong, my gift is for little Alejandro's education and nothing else. You and Francois can also contribute to a separate account and make whatever deductions you like. I'm including the information about the account so you can see how it works. Please know that I did this for my nephew's education. I love you."

But I'm baffled, I don't understand where they're coming from at all.
posted by Ruthless Bunny at 2:20 PM on December 27, 2014 [6 favorites]

I wonder if they're under the mistaken impression that this has something to do with claiming their child as a "dependent" on your tax returns, and that it therefore might jeopardize their ability to claim their child as a dependent on their tax returns. This is obviously mistaken, but it's the only think I can think of that would make sense of their "flipping out."
posted by willbaude at 2:21 PM on December 27, 2014 [10 favorites]

I, too, don't understand how your (extremely generous and thoughtful) gift could offend Reasonable People Who Understand How 529 Plans Work, either.

Which means your sister is either: 1) Unreasonable, 2) Does Not Understand How 529 Plans Work, or 3) both.

You didn't do anything wrong.

my sister called me on Christmas and screamed at me about how I am trying to use their child as a tax deduction and how dare I, etc.

That's straight up uncalled for, even if what she was accusing you of doing were true (which it's not). I agree - your sister was WAY out of line here.
posted by hush at 2:23 PM on December 27, 2014 [4 favorites]

I would be absolutely thrilled if my son's aunt did this for him. Instead she buys him useless junk that he has zero interest in. We toss it or donate it. You did a truly great thing for your nephew. As others have said, ignore the rant. In time they may realize what a gift you've given him. And if they never do, you've still done a terrific thing for him.

I'm sorry they treated you this way. On behalf of your nephew, I'd like to say thank you for the amazing gift of education.
posted by Kangaroo at 2:25 PM on December 27, 2014 [3 favorites]

Wow. Feel free to adopt my grandson's education instead. Your sister and her husband behaved foolishly, because they're wrong about tax benefits* and churlishly. Maybe they were drinking too much, had had a fight, um, something. In any case, you are making a splendid contribution to your nephew's future, the gift is to him, not them, and doubtless he will be grateful.

*People have some nutty ideas about taxes. Most tax breaks reduce the amount of tax paid, but not nearly as much as the amount of the expense. So even if you got a break, you'd still be behaving incredibly generously. sheesh.

Maybe a chilly email stating that the gift to your nephew is for his future education, has no current tax implications for you or them, and you hope to be at his graduation some day. You can probably leave out the part about them behaving like utter jerks; I 'll bet you knew that already.
posted by theora55 at 2:26 PM on December 27, 2014 [6 favorites]

Flipping out is out of line but there some legitimate reasons to want college savings outside a 529 plan (international portability, etc).

Let this lie for a few weeks then discuss further the next steps once your sister is rational.
posted by crazycanuck at 2:27 PM on December 27, 2014 [1 favorite]

Surely they intend to set up their own 529 plan in the state of their choice for the youngster, in which case you would be happy to make contributions to that account.

They just need to provide you the contribution information and you're good to go.
posted by Huffy Puffy at 2:31 PM on December 27, 2014 [1 favorite]

There could be some impact on FAFSA, depending on what the rules are down the road. And there are a couple tricky things about transferring such a plan and gift tax. But these are good problems to have. (I searched Fox News and 529.)
posted by ClaudiaCenter at 2:32 PM on December 27, 2014 [2 favorites]

Forgot to add, brianogilvie's right: there could be a STATE tax deduction for you IF you used your own state's in-state 529 plan. But, oh my goodness, THAT'S NOT AT ALL the same thing as "trying to use their child as a tax deduction."

Oy, your sister sounds cray!

but there some legitimate reasons to want college savings outside a 529 plan (international portability, etc).

Surely they intend to set up their own 529 plan in the state of their choice for the youngster

Yes and yes. And nothing the OP did here precludes the parents or anyone else from ALSO doing so for this child.
posted by hush at 2:33 PM on December 27, 2014 [1 favorite]

Dont you need the beneficiarys SSN to open that plan? Why do you have your nephews ssn? Is it possible they are upset about this?
posted by nakedmolerats at 2:33 PM on December 27, 2014 [5 favorites]

A lot of people don't understand that tax deductions don't ever earn more money than you gave out.

If you donate 100$ to charity, you can deduct that from taxes, OR, that $100 will be tax free. So, it may have only cost you $75.

However, that $25 savings will never exceed the $100 you spent to donate to charity.


A lot of media says otherwise, oh, they are donating to charity to show this big scheme of making more money overall. Donating to charity never makes more money than you donated.
posted by bbqturtle at 2:45 PM on December 27, 2014 [6 favorites]

Your sister and her husband are crazy to be mad at you- I agree that they might be (insanely) thinking that you are trying to claim your nephew as a dependent on your taxes or something similar, if they are very very unfamiliar with the way these plans work.

If this is the same sister from at least two of your other questions, however, it seems possible there is significant unstated backstory here and a long history of her flying off the handle and cutting you off for months at a time. If that is the case and/or if she is generally a little volatile, grudge-holding and unforgiving, backing off and being less involved in her life, generally, may make your life less complicated in the long run.
posted by charmedimsure at 2:48 PM on December 27, 2014 [4 favorites]

Even if this were tax-deductible, your money is going to your nephew and not the government. So your sister is a moron.

From an emotional standpoint, this is family. Perhaps it would have been prudent to present the gift in the form of asking for permission.
posted by phaedon at 2:59 PM on December 27, 2014 [2 favorites]

Can anyone tell me?

Nobody here can, unless your relatives are members here and respond to this question. Perhaps give it a few weeks to let all of the Christmas drama settle down, then call your relatives and ask them what's up. When they've had a chance to think about the situation and perhaps do some research, they might be in a better frame of mind. Emotions often run a little higher at this time of year and your sister chewing you out might be due to something completely unrelated, like her hubby burning the Christmas turkey and ruining dinner. Give them a chance to cool down and then give them a chance to explain what is wrong.

Some people have a lot of expectations around monetary gifts and the etiquette of the giving and receiving thereof. Or it might have come across that you were insinuating that without this money, your nephew wouldn't have an education. For what it's worth, I think the fund is a lovely idea, but the only people who can tell you why they're angry are your relatives.
posted by Solomon at 3:00 PM on December 27, 2014 [1 favorite]

That's a really strange reaction for such a nice thing. I did the same for my two nephews a few years ago, and I get a very minimal tax deduction because I use my own state's program, but that's not why I do it and I don't "make money" since the write-off is a fraction of what goes into the account.

I set it up a few years ago with the minimum on each ($500) and contribute $100 and $50 monthly to the accounts (older one gets more money since there's less time for interest). By the time each of them is 18, it will likely be about $25k in each account, which should give them a bit of relief on college expenses, but won't pay their whole way. I basically skip giving them gifts at birthday/xmas in lieu of these accounts and they know it.

I had to finance my entire college experience myself, and if I had a random uncle that gave me $5k or $10k or $20k for college, I would been stoked. The response from the parents baffles me completely.
posted by mathowie at 3:05 PM on December 27, 2014 [13 favorites]

> Well this is just a wild guess but could it be they're hypersensitive and erroneously feel criticized? "We never imagined thinking that far ahead but here's bolognius jumping in to pay for our little Elmo's college. He must think we're bad parents! Let's call him up and scream at him!"

This was my guess as well. I'm quite sure it has nothing to do with the details of how a 529 plan works; it's got to be a gut emotional reaction, and "she thinks we can't pay for our kid's education ourselves! she thinks we're bad parents!!" is the most obvious candidate. If I were you, I'd call her up and calmly explain that you're not doing it for deductions but because you thought it would be helpful, and if they don't want you to you won't. Then act accordingly. I'm sorry you have to deal with this, but such is life.
posted by languagehat at 3:13 PM on December 27, 2014 [7 favorites]

I agree that your sister is out of line and rude in having a major flip-out over this (possibly due to being a terrible person, or possibly due to not understanding the system, possibly a little from column and and a little from column b).
But by the same token--in my family, at least, this would be the sort of thing that one would definitely be expected to discuss with the parents before actually setting up the account, rather than springing it as a Christmas surprise. And we're about as far from controlling, helicopter parents as you can get.
posted by drlith at 3:27 PM on December 27, 2014

Wow. Your sister in law behaved like a huge jerk. Ignore her ignorant outburst and keep contributing to your nephew's educational fund. He'll appreciate it when he's of age and he's the one that counts anyway, right?
posted by LuckySeven~ at 3:48 PM on December 27, 2014 [1 favorite]

This is odd enough that I'm actually wondering if your sister is suffering from postpartum mental illness. That could her explain her previous outburst while pregnant as well.

How's your relationship with your other family members? Do you have a mom or other sibling you can ask, in case others have been the victim of similar irrational behavior? If not, I'd wait a bit and send her an email with the details and explanation.
posted by snickerdoodle at 3:57 PM on December 27, 2014 [1 favorite]

Your sister and brother in law are showing their ignorance.
posted by cecic at 3:58 PM on December 27, 2014 [1 favorite]

2nd languagehat - are your sister and BIL really broke right now? Do you sort of live in different worlds re class? Are they committed to a particular position on taxes, or on whether children should work for their education?
posted by cotton dress sock at 3:58 PM on December 27, 2014 [4 favorites]

One thing I haven't seen suggested yet: could they maybe want to use that money for themselves instead or could they be implying that by using a 529 you don't trust them to save the money on your behalf? Both ar reasons why a 529 is a good idea regardless of what the parents want.
posted by furtive at 4:01 PM on December 27, 2014 [10 favorites]

Is it possible that your sister feels that you are lording it over her somehow, particularly if she isn't together enough / financially prepared to do this sort of thing for her son herself? Could she be feeling that you are pointing out her inadequacy?

I almost wonder if mental illness could be at play. However even people without mental illness can get weirdly bent out of shape if they feel their boundaries are being infringed or that someone they have power issues with is trying to get the upper hand.

I dunno. I'd take a giant step back. Try to discuss it later as others suggested above.
posted by bunderful at 4:09 PM on December 27, 2014 [6 favorites]

If this is the only gift you got for your nephew, she also may be upset that they didn't get anything that is useful right now. Some people just really want tangible gifts or money they can spend right away, even if he already has so much stuff.
posted by wsquared at 4:15 PM on December 27, 2014 [1 favorite]

I just remembered that in order to set up the 529, I had to get the Social Security Numbers of my nephews, and I used that opportunity to warn their parents that it was a kind of bank-related gift so maybe that cushioned the blow when I surprised them later with the 529 plans?

If talking on the phone isn't working out, you might want to go the route of writing a letter/email and explain you're just trying to help out, and it's not being done for a tax deduction (maybe explain how it's a fraction of the money put into it), and it will only be used to offset future educational expenses that impact everyone (maybe mention it's not a judgment that you don't think they can provide, you were just trying to help, etc).
posted by mathowie at 4:15 PM on December 27, 2014 [1 favorite]

You definitely didn't do anything wrong here - I've done the same for an honorary nephew of mine and his parents were quite grateful. I think it's an awesome gift, a lot of parents want theoretically to save for college but feel so intimidated by it that they don't know how to get started.

One other thing I was wondering, you mention in the question that he has so much stuff already. Has that ever been a point of contention with his parents in the past? I mean, most kids do have more stuff than they need, and I think non-stuff gifts are the best, but stuff-loving parents don't necessarily feel the same, and if they felt that this gift is part of some kind of continued judgment on your part about their parenting skills and materialism, that could have been part of what set them off, i.e. "oh, bolognius is on his/her high horse again about how the kids have too many toys!"
posted by treehorn+bunny at 5:04 PM on December 27, 2014 [4 favorites]

You didn't do anything wrong, but I can imagine feeling weird about a family member deciding unilaterally that they were setting up a fund for my kid's education, especially if there's a backstory about independence. The way I would want this to go is:

Brother: I am interested in setting up a fund to help pay for your kid's education down the road. Have you already set up a 529? If so, I'd be happy to make a gift to it.

And then the response is either:

Me: Yes, I have, and thank you for the gift; or
Me: Yes, I have, but I feel the need to assert my financial independence, so no thank you; or
Me: No, I haven't, I can't deal because NEW BABY, thank you so much for setting this up or
Me: No, I haven't, I can't deal because NEW BABY, but no thanks, I'll get to this in time.

One more thing: it's certainly true that you're getting a tax benefit from this; first, because you can deduct it from your state taxes (if you're using your home state's 529) and second, because the money grows without being taxed, which means that it has more spending power when you spend it. Whether this is a tax benefit for you or your nephew is a semantic question -- it means you pay less taxes and thus have more money to spend, as long as you spend the money on college tuition.

And here's the last thing. I don't know if you have kids or not, but a 529 can change beneficiaries within the family without penalty. In other words, if you do have kids, or if you later have kids, you are perfectly free to spend that 529 money on your own kid instead of your nephew. If there are trust issues in your family, your sister may have this in mind; that what you are thinking of as a "gift" is money that is still completely under your control and which you are free to end up not spending on your own children instead your nephew. Obviously I don't think you'd do this. But she might think so.
posted by escabeche at 5:04 PM on December 27, 2014 [2 favorites]

As everyone has said, the parents are freaking out unreasonably and probably because they don't understand 529 plans. I've set up 529s for kids like you have and it is quite confusing to explain.

There is one wrinkle you may want to be prepared to defuse if they ask. The money you put in the 529 plan still belongs to you, not to your nephew or his parents. You would get penalized if you don't end up spending the money on his education and I think there's zero way to cheat it. But you should be clear yourself that this is still legally your money, even if earmarked for his use.

Feel good about your generosity, hopefully the parents will calm down and be grateful. I feel certain they will be in, oh, seventeen years.
posted by Nelson at 5:13 PM on December 27, 2014

From your follow-up to a previous question, it looks like there are some difficult issues in your family about whether education is valued. Is it possible that your sister saw this as you 'pushing your lifestyle' on them? Doesn't justify her behaviour but might help explain it.
posted by une_heure_pleine at 5:16 PM on December 27, 2014 [7 favorites]

I suspect bbqturtle has it correct that a misunderstanding of taxes makes them think that you're making a profit from it and calling it a gift.
posted by Candleman at 5:21 PM on December 27, 2014

Is this the same sister who had a screaming tantrum over an offhand remark and refused to speak to you for months?

I don't think that the college fund is the issue here. A misunderstanding over tax deductions does not merit a screaming fit. It seems to me that your sister has psychological issues - whether in general or with you in particular. She sure does a lot of screaming, if we are to infer from your previous questions.

Your gift was kind and generous, and you did nothing wrong. Your sister has issues, and there isn't much you can do about it. Just tell yourself that it is about HER and not anything you did. It's natural to be hurt and upset, but there's nothing you can do to make your sister react in a more mature way.

(I would add - be sure to stay in touch with your nephew if at all possible - if your sister decides to scream at her kid the way she screams at you, he's going to need all the supportive adults in his corner that he can get.)
posted by Rosie M. Banks at 5:50 PM on December 27, 2014 [16 favorites]

Looking back I think that it was an issue of you using kid's SSN to open an account. It would have probably been better for them to open it and you contribute regularly. It MIGHT end up being an issue becuase they'll be claiming the baby on their taxes and this will be tied to his SSN.
I as a parent might also be a bit annoyed by you doing this without asking. I'm not saying that you didn't do a good thing but that this seems a little overreaching.
posted by k8t at 6:06 PM on December 27, 2014

529 plans can be used as a way to avoid estate taxes, but I'm guessing in your case, the amounts of both the 529 and your estate are more modest. And the benefits to the nephew (and his parents!) seem to outweigh any immediate benefits you gain.

My inlaws have set up these plans for their post-college aged children. Doing so will reduce their estate taxes eventually and allow them to fund their great-grandchildren's educations, but there's no effect on the taxes owed by their kids.
posted by vespabelle at 6:09 PM on December 27, 2014

Not being in the USA I have never heard of a 529 account, so if we assume your relatives don't understand them either, them and I are in a similar boat.

My first assumptions about a tax-deductible college account, before reading this thread were
(a) that you might only be able to set up one per kid, in which case you setting this up precludes the kids parents doing so and therefore you are getting a tax deduction that is no longer available to them
(b) that the money in these accounts can only be spent on college, which could be a point of conflict if the family in question doesn't think a college education is worthwhile, or otherwise doesn't believe their child will go to college.
(c) that if the child doesn't use the money, then maybe (with some sort of heavy fee/tax) it reverts to the person who set up the account, ie if they don't expect him to go to college, there's a high chance you'll just get your own money back in the end anyway.

Now it seems from what people say here that these things mostly aren't true, but I can see how someone could think they are, and I can see why they would be annoyed if so.
posted by lollusc at 6:35 PM on December 27, 2014 [4 favorites]

The most likely answer is that your sister misunderstands the gift and is also generally prone to being kind of an asshole.

If it's not the obvious answer, then other possibilities include: (A) your sister perceives this as some kind of presumptive meddling in their financial affairs, including an interpretation of your gift as being based in part on a belief that she and her husband cannot manage their own finances and thus need 'help' in sending your nephew to college--if they think you believe this about them, it may explain why they resent the gift; (B) maybe they had a Christmas wish list with all kinds of practical things they really need right now, because having a baby is super expensive and they need help NOW, not in 20 years, and they're annoyed and frustrated that instead of just picking something off of the wishlist you set aside money that cannot be used when it's really needed.
posted by MoonOrb at 6:58 PM on December 27, 2014 [2 favorites]

If a sibling of mine who was better off professionally than me were to set up a 529 for my kid, I would be taken aback and probably a bit offended. Not being an asshole, I would express nothing but gracious thanks; but in my heart I'd be annoyed. Partly because it smacks of "you suck and probably won't provide adequately for your own kid, but I will because I'm so much more successful and responsible"; and partly because, since the 529 remains under your own control and, unlike regular birthday checks, can be re-allocated by you, it feels like it comes with strings attached, like "I'm putting this money aside for your kid but I could change my mind about it at any time and this is my way of lording it over you and putting you in a role of a long term supplicant."

Which is not to say that you did anything wrong. I think she is way out of line to express anything but thanks. It is a generous and kind thing you are doing. But I can also understand why she's annoyed (even though it's not what she said... I suspect she came up with vague nonsense about tax benefits because she couldn't or wouldn't really articulate the real problem.)
posted by fingersandtoes at 10:14 PM on December 27, 2014 [11 favorites]

Fwiw it would seem a bit out of place to me (I am not american, so take that with a grain of salt). As in this is something that would be a parent's role, and it's a bit presumptuous for you to take it on. A less...kind of weighty gift would be some toys, or a cleaning subscription or a massage or something. It would annoy me a bit, I think. Like you are grandstanding or something, maybe. I might think- just get me something useful. At my least generous moment. And I had most of those soon after the birth of my first child.
posted by jojobobo at 11:23 PM on December 27, 2014

Personally, I would let go of the idea of figuring out what, if anything, you did wrong and focus on how to move on from here. Your sister is obviously sensitive to something and overreacting for some reason, but I get the impression that your priority is maintaining a relationship with her and your nephew and I don't think allocating the blame will necessarily help with that.

I nth the idea of writing an email that lays out what you were trying to do and explaining the exact implications of the account. In the interests of keeping the relationship going, I would add (1) an apology for hurt feelings and perhaps an apology for not speaking to them in advance before setting up the account (you could frame it as you getting overexcited about the idea and not realising how it might look to them) and (2) an offer to do something different for your nephew if they really feel uncomfortable about your maintaining this account for him. If your end game is to make sure you do help your nephew out in this way, the easiest way to do that is to give your sister a face-saving way of climbing down from her angry rejection of the gift. Taking some of the blame and offering a choice is a good way to do that.

I accept that it's very annoying to reward someone for acting unreasonably but it seems like your sister will not be open to any criticism at this point in her life so the issue becomes which matters more to you, expressing your (perfectly reasonable) upset at her misbehaviour or giving this gift to your nephew while minimising the drama between you and her. I'm not sure you can do both, given what your sister seems to be like.
posted by Aravis76 at 3:25 AM on December 28, 2014 [2 favorites]

Given your posting history about family reactions to education and your sister, I'm going to float another possibility, based on my own life experience with grandparents who reacted like your parents, and my mother (their daughter) who also threw tantrums and, to summarize, said "fuck off" to anyone and everyone who tried to set up an educational fund for me as a child. (They remembered. They told me decades later when I approached them about my mother.)

Your sister has issues. She is taking them out on others. Her child is an "other". It's not just you in this equation, never forget that. If you think a baby couldn't possibly be held responsible for jealousy etc., think again, speaking from lived experience I know from multiple family sources now (age 38) that my mother did just that when I was an infant. My mother is not a unique snowflake, unfortunately. Your nephew is going to need all the familial support he can get.

I'd suggest a two-prong approach:
1 - let the dust settle, then see if you can discuss it with her.
2 - in ANY case, being as you want to help your nephew and this most emphatically does not hurt anyone beyond even the most forgiving interpretation of ruffled parental feathers, keep that 529 open. Do the parents have to be aware of it? I mean, can you keep mum about it from here on out if they prove themselves to be rage-happy-rage-festers? To repeat: your nephew is going to need all the support he can get.
posted by fraula at 4:11 AM on December 28, 2014 [8 favorites]

I just set up a new 529 for my child in my home state. It reduces my taxable income for my state taxes and, as such, will give us a tax benefit. When I sent out a note to the grandparents to alert them to this account, I also made it a point that they may be able to set up a similar account in their home state and reap their own tax benefits. Because I don't really care how the money gets here when my kid is ready to go to college - I just want it to get here.

So, A) your sister is WAY out of line. B) you aren't doing anything wrong but it sounds like you might want to talk to an accountant or tax professional to figure out what is the best benefit to you and to your nephew. C) you could probably pull together information on 529s for your sister and her partner so they understand what it is, how it works, and how they might benefit from setting up their own 529, either in their state for possible tax benefits or in another state (for better returns or whatever). And, D) you can then inform her that if she ever calls you up screaming again she can expect you to hang up immediately. The Internet supports you on this. Good luck! You are a lovely auntie!
posted by amanda at 11:39 AM on December 28, 2014

And here's the advantage to not having a 529 under the parent's name, it can limit the amount of financial aid available to the child. Again, a tax or finance professional would be a good person to talk to if it's even worth it to back to your sister with this.
posted by amanda at 2:04 PM on December 28, 2014 [2 favorites]

I offered to set a 529 up for each of a sibling's children. I was rebuffed with, "We don't need your help or your charity. We're doing fine on our own, thanks." Odd? Sure. But I took them at their word, and send gift memberships or movie ticket vouchers for the kids now.
posted by RogueTech at 2:50 PM on December 28, 2014

Thanks for all the replies. FWIW, my parents are actually on my side, and my mom is particularly pissed (my dad said it's the angriest he's ever seen her in 45 years of marriage). I am still in school, and my sister and her husband have a 6-figure income. So I don't know, nor will I try to understand, what her problem is. 3000+ miles away from crazy helps. Quietly funding away...
posted by bolognius maximus at 5:29 PM on December 28, 2014 [5 favorites]

FWIW, my parents are actually on my side, and my mom is particularly pissed (my dad said it's the angriest he's ever seen her in 45 years of marriage).

It's really sad and unfortunate that your parents are STILL actively taking sides in their adult children's squabbles here, even though for the moment they happen to be on your side.

Consider that your sister might not actually be "crazy" so much as she has picked up certain unhealthy learned behaviors from your family of origin, particularly from your mother, such as the norm that screaming at family members over the telephone is acceptable when you have a problem with a baby gift or congratulatory communication that has not been done to the screamer's own personal liking. From your July 2014 AskMe in which you share that your mother is also a screamer:

"my mom...called me a couple of days later and bitched me out, how dare I ignore my sister, not acknowledge sister, etc. (Sister) apparently had been complaining to my parents that I didn't acknowledge the pictures that she had emailed. I was really taken aback. I didn't even get a 'hello', just a screaming rampage."

That is profoundly not ok, and what your sister did in response to your 529 gift is also not ok; and I really feel for you OP. Keep your head up.
posted by hush at 7:55 PM on December 28, 2014 [9 favorites]

No one here can say why this touched off such a reaction. One thought occurred to me: did you go to college and your sister didn't? I was the lone college kid in my family and years ago this was a sensitive issue; because of this, I wouldn't give this sort of gift to my niece (contribute to an existing account, yes; set up a new one, no.)

I will say, reading this and your past questions, that either a) your sister is very difficult to get along with and you may just need to detach from her as much as possible to avoid these minefields or b) you are very invested in portraying your sister as irrational and yourself as the calm, cool, collected, rational one. I'm not saying it's option b, but if so, there may be something you're not admitting about your role in your family dynamic and it might be worth examining in the interest of a more peaceful sibling relationship.

All that said, bottom line, this is a really nice gift it certainly will benefit your little nephew, so you are a good aunt and he's lucky to have you.
posted by kapers at 6:39 PM on December 30, 2014

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