Reply to How much to put into 529s?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Is the $400k your whole inheritance or is that just the intended (inherited) 529 funds?

If you’re inheriting $400k, I’d be concerned by front loading 529s, you’re effectively gifting your inheritance to your kids. In the event of a divorce, that money is gone to you. Why not just keep the bulk in your separate name? If you don’t commingle the funds, you can always use it for college but it’s yours otherwise if you divorce. [/quote]

This seems bizarre to me. I would never treat an inheritance like this as though it’s not mine and my husband’s jointly. And it would still be going to the kids’ college fund anyway. What difference does it make? It’s eye opening that some people treat family finances this way, so glad my DH and I don’t. [/quote]

Check back in if you ever have the misfortune of going through a divorce, and let us know if you still feel this way, assuming you are the person inheriting money from your parents.  [/quote]

Well couples who jointly merge their finances are much less likely to end up divorced.  Having a mindset from the start of "we are a couple, and we do things together and for each other" goes a long way towards a healthy relationship. I've been a SAHP for almost 25 years, I manage the finances and have no concerns.  It is all equally mine as it is my partners.  Because we are a family and have always thought that way (hint: I wouldn't have been a SAHP if my spouse thought "the money they earn is theirs and not the families", then again, I wouldn't' have married someone who thought that way)

If the inheritance was large enough (ie way more than $400K IMO) the persons giving you the inheritance would have set up stipulations thru a trust if they cared about "keeping it in the blood family"---I can see that happening for millions but not for $400K. 
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$400k is enough to justify a trust.  This is either a naive or a self-serving way to look at things, depending on where you're coming from.  My friends who divorced or are divorcing in their 40s had joint accounts and expectations that their marriage would last until death.   In any case, I think if OP transferred the gifted money directly into a 529 plan for the kids, you'd argue that it is a completed gift and not part of the marital estate if you end up divorcing.  In other words, it belongs to the kids rather than either spouse and can't be considered in a later division of assets.  I'd briefly run it by an estate planning attorney on this point, but I like the idea and think it's a nice way to pass money to the next generation and relieve pressure for OP and OP's spouse to have to continue saving for college. [/quote]

529s don't belong to the kids, though -- I guess you could try to argue that in a divorce proceeding, but they have both owners and beneficiaries, and I'm not sure putting the money into a 529 would shield it from divorce proceedings.

I don't think $400,000 is enough to justify a trust, nor did my grandparents when they gave my wife and me that amount several years ago as part of their estate plan. I put it in a joint account, which their lawyer confirmed with me but didn't argue against. If we split up one day, I don't see why my wife shouldn't have a claim on that money, which I did nothing to earn other than pick the right rich grandparents.[/quote]

Yup!  and 400K is very different than $5-10M.  Had it been $5M+ I suspect your grandparents would have put trust rules in place to ensure otherwise (or not---it's their choice) 
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