WWYD

[AppleDumpling]

I would let your daughter keep her share of what is essentially an inheritance from her grandfather, and let her make the decision. While her investment has a longer time to grow, the cost of college tuition is going up rapidly, so she may/will need more to pay for the same degree her siblings have. Seems to me the fairest way to handle it.

 

[sam_gordon]

So maybe the multiple accounts made it easier initially to ensure some level of fairness.

And I was referring to you continuing the account for the future grandkids that don't(?) exist yet. Maybe you already have grandkids, not sure.

I too had two 529 plans that were started with money initially from the in laws. Between the initial deposit, and monthly deposits my wife and I made for 15-18 years, my kids were lucky enough to graduate loan free.

I have kept one of the 529 plans open and have continued to make monthly deposits. My financial planner argued against it saying the money would be more flexible in my retirement accounts but the emotional side of knowing I was setting aside money specifically for the future grandkids education out weights the flexibility in my mind. He agreed as the money is still being saved.

I am long used to making the monthly deposit as I have been doing it for 18 years. Just have to continue it for another 18 years and will then have to figure out how to fairly distribute the money between the grandkid(s) or heirs if there are no grandkids.

Yea, we kept talking about needing to put monthly money into the 529 for the kids, but somehow just never did it. So all of the money is just the initial amount and whatever it rose to.

First grandchild is on the way.

 

[sam_gordon]

Not that you can go back in time but instead of splitting the dollars equally I would have give oldest the most, the middle slightly less and the youngest the least. They would have all been around the same range but this would account for years of growth for the younger 2.

In hindsight, that makes sense. Splitting things equally at the time made sense then.

 

[kdonnel]

Yea, we kept talking about needing to put monthly money into the 529 for the kids, but somehow just never did it. So all of the money is just the initial amount and whatever it rose to.

First grandchild is on the way.

We started with $25 a month per kid, then when we realized we could afford more we increased the monthly amount. Even with that small amount for years, time was on our side.

Plus both kids received the lottery funded Zell Miller scholarship which paid 100% of tuition. The 529 went to pay room and board expenses which are much greater than tuition.

 

[sam_gordon]

Plus both kids received the lottery funded Zell Miller scholarship which paid 100% of tuition. The 529 went to pay room and board expenses which are much greater than tuition.

We got some lottery funded scholarship money too, but the maximum is only $2500/year. DD2 qualified for that (the other two got lesser amounts), but her school screwed her out of a couple hundred (don't get me started on that) her first year, and since she's finishing early (her school is on quarters), she doesn't even get the full amount for this year either.

 

[_19disnA]

The kids all know/knew we set up the accounts, but they never learned how much we put in or (to our knowledge) how much any of them built up to.

Part of deciding where to go to college is about how much it costs/how much in loans are needed etc. So they chose a college without knowing how it would be funded? If the one child applied for any sort of student loan, wouldn't they need to know how much was in the account so they knew how big of a loan to apply for?

Personally, I think you decided previously to split the money equally 3 ways and the fact one child used more/less than another should not change the original distribution.

 

[sam_gordon]

Part of deciding where to go to college is about how much it would costs/how much in loans are needed etc. So they chose a college without knowing how it would be funded? If the one child applied for any sort of student loan, wouldn't they need to know how much was in the account so they knew how big of a loan to apply for?

We told them we had some money for them. I think we told them how much we could give them (from the 529) each year, but we never told them where the money was coming from. We just said "college account". I can't give you specifics, but so far it's all worked out.

 

[The Mayor]

I'm going with the majority and thinking it's technically your DD money and she should keep it. Your other two children used all their money for their educations and I don't your DD should be denied all the money you set aside for her because she didn't need it all for hers.

 

[easyas123]

If they were my kids...and they all made their own choices in terms of school, loans and whatnot? Then I'd encourage DD2 to roll it over into a Roth.

 

[barkley]

DD1 used all of hers on a bachelor's degree, still needed some student loans, but is teaching and is SUPPOSED to get some of the loans wiped off if she remains a teacher.
DS had four more years for his plan to increase, used all of his on a bachelor's degree, still needed some student loans. He graduates in May and is still looking for a "career" job.
DD2 had an additional two years for his plan to increase, used part of hers for an associates degree (finishes in March), and didn't need student loans. She has a part time job, with hopes to do Disney College Program next year and then who knows.

I would let your daughter keep her share of what is essentially an inheritance from her grandfather, and let her make the decision. While her investment has a longer time to grow, the cost of college tuition is going up rapidly, so she may/will need more to pay for the same degree her siblings have. Seems to me the fairest way to handle it.

I agree that it should remain the youngest's. all of the siblings made choices about their educational pursuits. that one had more time due to age for her account to grow AND that she took a less expensive option does not diminish or eliminate her rights to what was set up as her INDIVIDUAL education (or in lieu of education a retirement option) fund. as was pointed out above if she chooses to return to get a higher degree in the future the cost will likely be higher. additionaly if like her siblings she ends up with some student loans to cover any short-fall she's going to be likely looking at much higher interest rates (I was shocked to see what the current rates are for fed loans as compared to what my oldest's are at from less than a decade ago-nearing double) so any 'bonus' she aquires by compound interest due to her age could easily be a wash-out due to increased costs. even if she doesn't opt to go on for further education I believe that her 'share' of a gift should not be used to offset the expenses of a sibling who has already exhausted their own share.

 

[gottalovepluto]

Stays DD2s. Giving the money to the sibs seems like punishing DD2 for her more conservative financial choices.

 

[jrmasm]

Are you considering pooling your other 2 kids’ college debt together and expect all three kids to pay the debt equally?

 

[brockash]

Because these can be fun...

Backstory:
When DW's dad passed away, we ended up with a small inheritance. At the time, we split the money three ways equally and set up 529 plans for our three kids. The kids all know/knew we set up the accounts, but they never learned how much we put in or (to our knowledge) how much any of them built up to.
DD1 used all of hers on a bachelor's degree, still needed some student loans, but is teaching and is SUPPOSED to get some of the loans wiped off if she remains a teacher.
DS had four more years for his plan to increase, used all of his on a bachelor's degree, still needed some student loans. He graduates in May and is still looking for a "career" job.
DD2 had an additional two years for his plan to increase, used part of hers for an associates degree (finishes in March), and didn't need student loans. She has a part time job, with hopes to do Disney College Program next year and then who knows.

There is a not insignificant amount of money left in DD2's 529 plan.

So, the question is, what to do with DD2's left over money.
Basically, it can stay in the 529 in case she ever wants to go back for a Bachelors.
It can be transferred to a Roth.
We can change the name on the account to either of the other two.

I lean toward splitting the remainder three ways, DD1 & DS use the money to pay down their student loans (won't cover the entire amount, but will take a chunk out of it), DD2 chooses if she wants to hang onto it for future schooling or transfer to Roth. Our hesitation though is "is that fair to DD2 (to give 'her' money to her siblings)"?

Not a bad problem to have, wondering what others would do. And no, DW & I don't have enough money to help pay down the loans otherwise.

And please, no comments about whether they should have taken student loans or not. That doesn't matter at this point.

Keep it even. The 2 that got BAs may have the opportunity to make more money in the long run due to their choices. Dd2s money should stay hers to use for further education or ira.

 

[Mommb]

I am with the majority that, at least for the next few years, the money should remain in DD2's account. She may get a great job that doesn't require further education, or she may find that getting a bachelor's degree, or vocational training, would be helpful.

I understand your thinking that DD2's account had more time to grow, and therefore a greater balance available to use, than the accounts her siblings depleted, but they (and you) have had that same amount of time to earn money and invest elsewhere.

If it becomes very unlikely that DD2 will pursue further education, taking the investment growth (or remaining amount, if that's less) and splitting it among all 3 kids, as unrequited23 describes, might be reasonable.

 

[eticketplease]

The 2 that got BAs may have the opportunity to make more money in the long run due to their choices.

This is not the case in all situations. The one obtained a B (We don't know if it is Science or Arts but anyways) in teaching. A lot of people in various fields can make more with just an associates degree compared to a teacher with just a BA or BS degree.

 

[kdonnel]

All those saying the one child should be allowed to keep their money, understand that the money in a 529 does not belong to the beneficiary?

From a legal and tax perspective the money belongs to the account owner.

 

[tvguy]

And no, you can't use the funds for something else. Needs to be education based or turned into a Roth account.

I have no advice for you.
My advice is for anyone considering opening a 529 plan, and what I quoted above is the reason we did not open 529 plans. Too many restrictions and not enough benefit. We felt student Direct Unsubsidized Loans and Parent Plus Loans made more sense. Our oldest was the only one who went to a private University, and thus was the only needing any loans. Our youngest, went to two California State Universities, a Community college (which is free in California) and did a foreign exchange at a University in the U.K. and everything was paid out of pocket as she went. Averaged out to about $300 a month, less than a car payment.

 

[sam_gordon]

I have no advice for you.
My advice is for anyone considering opening a 529 plan, and what I quoted above is the reason we did not open 529 plans. Too many restrictions and not enough benefit. We felt student Direct Unsubsidized Loans and Parent Plus Loans made more sense. Our oldest was the only one who went to a private University, and thus was the only needing any loans. Our youngest, went to two California State Universities, a Community college (which is free in California) and did a foreign exchange at a University in the U.K. and everything was paid out of pocket as she went. Averaged out to about $300 a month, less than a car payment.

But you have to pay interest on the loans, don't you? I still like the 529. If you don't use it for secondary education, you can transfer to a Roth.

ETA: The $300 you paid a month comes out to $3600/year. That MIGHT cover room & board for a semester. Ideally, we would have been able to afford putting them through school with no loans. Which they might have been able to do if they went to a school that didn't have their major & interests.

 

[mjkacmom]

I have no advice for you.
My advice is for anyone considering opening a 529 plan, and what I quoted above is the reason we did not open 529 plans. Too many restrictions and not enough benefit. We felt student Direct Unsubsidized Loans and Parent Plus Loans made more sense. Our oldest was the only one who went to a private University, and thus was the only needing any loans. Our youngest, went to two California State Universities, a Community college (which is free in California) and did a foreign exchange at a University in the U.K. and everything was paid out of pocket as she went. Averaged out to about $300 a month, less than a car payment.

My kids all attended public universities, the total cost was about $620,000 (and thats with one graduating a year early, and two with merit, $10,000 a year and $17,000). They had 529s, federal student loans, and private loans (interest rate was always better with private). Our in state public’s are about $40,000 a year with housing.

 

[BostonEd]

I would hold off on deciding anything right now. Your youngest is barely in their early 20's. Later, if you wanted to even things out between the kids, I would subtract the amount remaining of the initial 529 for DD2, then divide what was left by 3 to transfer into a roth. The kids would be only splitting the investment growth. That seems roughly fair-ish to me.

I agree with this.
I also disagree with people saying "it's her money, she should keep it." It's NOT her money, it is @sam_gordon 's money, which he has allocated into educational savings accounts. He can move things around as he sees fit for their educational purposes. And if he wants to say "she's had life lessons now, so here's the money" that's fine, but it is not her money (yet).