Can you have an "unknown" 529?

[Anonymous]

A friend of mine asked me and I didn't know. Her situation is that her MIL is very wealthy, but also has significant mental health issues. Visits with the grandkids have to be closely supervised, and the adult children spend a lot of time managing her health affairs.

The MIl has, at various points over the years, talked about both 529s and trusts that were set up for the grandkids when they were born. My friend has no idea how real these are. The MIL is prone to wild exaggeration at various points in her mental health cycle and it is entirely possible its all nonexistent. Friend and her DH do not want to ask directly because MIL is also deeply paranoid and they are afraid asking the question will set off a paranoia cycle. Her mental health is fragile and they can't risk setting off a bad cycle.

My friend and her DH don't make a lot of money, and if there is truly money set aside for educational expenses, it would be a huge relief. But they really have no way of asking MIL.

Trusts are probably impossible to detect or rely on, but what about 529s? Is there a way to find out if there is a 529 in the names of the kids? If money was put in a 529 by MIL when the kids were born (and she was more mentally stable) does it just stay there? I assume MIL could withdraw with penalties if she controls the account, right? If somebody sets up a 529, do the beneficiaries get notice at some point?

[Anonymous]

I would imagine you find out at her death. In DC at least the statements and such all go to whomever opened it.

[Anonymous]

I think my son's 529s are in my name. So, I could give them to anyone related to me for college. I think you can get some in the child's name, but it makes more sense for most families to do it in a parent's name. I'd be interested to hear what a more knowledgable person says (accountant).

[Anonymous]

My mother opened accounts for my kids and we never got formal notification or statements. She used their SSNs. One DC is drawing from that account now and the money goes direct to the college and DC gets the 1099Q or whatever it is for the withdrawal. Obviously in this instance we were aware of it, but not sure we could have gotten access to it separately. DC was the beneficiary but not the account owner?

[Anonymous]

You wouldn't know about it as the statements would go to the owner, not the beneficiary. My ILs have one for DD, which we know because they needed her SSN. The send us the statements once a year or so so we roughly know what's in there.

So if MIL either opened a 529 somewhere where they don't require the beneficiary's SSN or your friend/her DH provided the child's SSN there very well could be an account that they would never know about.

[Anonymous]

Yes, they did give MIL the SSNs when the kids were born several years ago.

So I guess a second question comes out of this: if you are the beneficiary of a 529 and the person who started it is somehow not available (but not deceased, either) when it comes time to go to college, is there any way to find out if you are a beneficiary?

[Anonymous]

Does someone in the family have power of attorney? If her mental health is borderline, someone should have this. Then they could then help to find out the details.

[Anonymous]

No but they are discussing it. It is tricky because she goes through cycles of more lucid thinking, bit she is also deeply paranoid. At some point the siblings will probably have to make some sort of power of attorney arrangements.

[Anonymous]

Every account has a successor owner. When the MIL dies, the new owner takes over. Also, remember that a beneficiary can be changed ina 529. The MIL or successor owner can change the been to a sibling, cousin, etc.