Anonymous wrote:That amount isn't taxable but I'd be disinclined to simply put it in a savings account where she could access it and buy a car at age 16 or blow it on clothes, for example. I'd definitely advocate for putting it in a 529 or bonds or other investment vehicle so that it benefits your DD and is available when she is an adult but not something she can access on her own while still young.

Honey minors can’t buy cars. They can’t legally enter into contracts.

This is a strange post.

If money is in a custodial account, is there a way to change the type of account so DC doesn’t get control at 18?

One other option is a custodial account. These were widely used before 529's and have the advantage that the money does not have to be used for college. Most of the money given to our DCs by grandparents is put in a 529 but we also keep a smaller portion in a custodial account. I agree that a trust is not necessary for $10k.

From the web: Custodial accounts—Uniform Gift to Minors Act (UGMA) accounts or Uniform Transfer to Minors Act (UTMA) accounts—are another tax-advantaged way to save for college. A parent, grandparent or other adult is custodian for the account and makes all the investment decisions until the child for whom the account was opened reaches the age of majority. UGMA accounts are limited to money and securities.

My parents have given the kids some money -maybe $75k or so. Most went into a 529 that is in their name (but DCs are the beneficiaries). They also bought them some stocks, partly as an educational tool so they could understand the stock market (one kid loves it and follows his stock prices all the time, the other at least understands it).

A trust shouldn't be necessary for $10k.

A lot of people have mentioned gift tax and the $14,000 limit and I just wanted to mention that the limit is only the threshold for reporting the gift. You can give more than that, you just have to report it. It doesn't even become taxable until you hit a lifetime cap, which is several million. (If you expect to hit that, you can pay the tax as you go, but you don't have to.)

A lot of people worry about this unnecessarily.

A trust is not legally required or anything - and would be silly here given the relatively low amount of money.

I would just ask them if they are OK with the money going into a 529 college fund, and if so would they like to start their own account; or alternatively they can give you the $ and you put it into 529.

You could also consider here whether you/ they live in a state that allows tax deductions on 529. If they don't and you do, then you having the account may make more sense.

If 529 is already fully funded I'd just do a bank account. Then when she gets her first job she can transfer some of the saved $ to a Roth IRA and will have a head start on retirement!

529.

In 20 years that 10k will be 30k.

They can give up to 14 k each to her. Going into her bank account is fine.

Have them set up a 529 for her. That is what my inlaws did as well.

That amount isn't taxable but I'd be disinclined to simply put it in a savings account where she could access it and buy a car at age 16 or blow it on clothes, for example. I'd definitely advocate for putting it in a 529 or bonds or other investment vehicle so that it benefits your DD and is available when she is an adult but not something she can access on her own while still young.

That's a lot of money for a minor. Do they want to give it as a lump sum or some now, some later? Personally, I'd feel better with a chunk of it going in the 529, a chunk in a savings account and some less immediately available - like a bond.

But it's your parents' money so I'd ask what they have in mind first.

Do you have a 529 plan set up for her? That might be a good way to go.

They can each give up to, I think, 14k a year under the gift tax act, without any penalty.

Either way is legal - totally depends on what you, as the parent, want to do with it.

They want to give a 10K gift to my daughter. Do they need to set up a trust or can they just deposit it into her bank account? she is a mnor.