Question about setting up college funds for niblings

August 1, 2023 10:08 AM

My spouse has an inheritance and we want to set up college funds for the children of my siblings. One of my siblings is already really well off and will have college money for his kids. Do we offer to set up the funds for all the kids, or only the kids whose parents don't already have the money?

We want to set it up so that if the kids don't go to college, they can still get the money at a certain age to help them get set up in the world as young adults.

posted by MsMartian to Human Relations (11 answers total)

If you're well enough off yourself to do it, I'd say set them up for all of them--there are all sorts of things that could happen to your sibling's money between now and when his kids go to college.
posted by box at 10:18 AM on August 1, 2023 [6 favorites]

Well, that is likely to cause some bad feelings...

I would discuss it with the well off parents. There are certainly ways to do this. 529 plans and UTMA/UGMA accounts. But, "young adults" are just that. And age of majority is generally like 21 years old. So now those 21-year olds are going to have a big wad of cash, which can present problems.

But good on your spouse for wanting to be a helper. I'd certainly talk to a lawyer to discuss the options.
posted by Windopaene at 10:19 AM on August 1, 2023 [1 favorite]

Best answer: I did this; we have a handful of niblings, and only set up funds for the two whose parents make very little money. We did not broadcast our arrangements, but we didn't keep it secret, either. When it came up, we were just very direct, saying something like, "Jane and John and Jimmy have money in their immediate family, Bobby and Barbie don't. So as their extended family, we're just chipping in so all our family's kids can get a good start in life."

(Also, the rules around 529 plans have been loosened in recent years, so if you're worried that setting one up will limit the availability of the funds, I have one nibling who, post-college, is transferring some of their unused 529 balance into a Roth IRA for themselves.)
posted by minervous at 10:19 AM on August 1, 2023 [10 favorites]

I'd let the well-off siblings know that you'll be just helping the siblings without college savings before you set anything up - something along the lines of "Hey, just wanted to make sure you hear this from us and not someone else - we're doing [x] for [x] reason, it's nothing personal." Likely will head off any potential awkwardness down the line.
posted by coffeecat at 10:40 AM on August 1, 2023 [1 favorite]

Another approach would be to set up the college fund for the kids who need it AND set aside some amount of money that will just be a gift to all the kids that they get at a certain age. So everyone gets something, but the kids who need an extra boost get a little more.

I was gifted some money (not insignificant, but not grand either) by my grandmother upon graduating college and was able to use that in a way that has paid off immensely.
posted by brookeb at 10:42 AM on August 1, 2023 [18 favorites]

Anecdotally, I was one of the nieces/nephews whose parents were financially stable, and I never once questioned why my cousins received “more” from my grandparents. I knew why they did what they did, because it was obvious.
posted by samthemander at 11:04 AM on August 1, 2023 [4 favorites]

If you need some phrasing for this, look up the difference between equity and equality.
posted by heatherlogan at 3:08 PM on August 1, 2023 [2 favorites]

I think what I'd do is get on a call with both your siblings, and your spouse, and tell your siblings what's up and ask how they think you ought to proceed. I think I'd do it as one call all together, so that neither of your sibs winds up feeling like the last to know.

I think this is a wonderful gesture, and I hope it goes really well for everyone. But I can totally see both sides of the question, so I think there's a very good chance that if you make the decision on your own without giving the others a chance to feel like it was their decision too, someone will wind up feeling hard done by -- possibly for reasons you have no way of anticipating.
posted by fingersandtoes at 3:11 PM on August 1, 2023 [1 favorite]

For another way of doing this, if you're in the U.S., check out Oregon College Savings Plan.

Before you freak out, NO, you DON'T have to be in Oregon, nor does the school(s) have to be.

One thing is - it's possible to set it up in a manner in which it's not for one specific beneficiary - it can be used for multiple, AND the beneficiaries can change.

So it's a little different. But in case it might be more useful than traditional methods, I wanted to share it.
posted by stormyteal at 7:01 PM on August 1, 2023 [3 favorites]

One of my siblings is already really well off and will have college money for his kids. Do we offer to set up the funds for all the kids, or only the kids whose parents don't already have the money?


If you don't set up funds for the kids of the well off sibling, consider that not everyone is privileged to have the monetary support of their parents for college. Plan for what you would do if these kids who don't actually have any control over whether they can access the money face a situation where their parent refuses to provide the financial help you are assuming they will get. And talk directly to the kids about why you decided the way you did when they are older.
posted by yohko at 6:44 PM on August 3, 2023 [2 favorites]

Strong agree with yohko as the child of parents who could have afforded to pay or at least help pay for college but didn't.
posted by hazyjane at 11:07 PM on August 5, 2023