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I am divorced with 2 kids. My mom wants to setup a college savings account of some type for my older kid. Last time she did this, she used my kid's SSN and deposited some money. I do not know what type of account this was (529 or some other type). But the intent is to have the money available for my kid when he turns 18.

Somehow, my ex-wife was able to tap into it and withdrew all the money.
So this time around, I'd like to make sure that account cannot be tapped into by anyone. And assurances of a pimply-faced teen at the bank just isn't enough.

So, questions:

  1. How can I create an account that is untouchable?
  2. What type of account (e.g. 529?) should I setup?
NeedAdvice
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1 Answers1

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A 529 has a custodian and beneficiary. If, say, my Mom is custodian and my daughter the beneficiary, neither my daughter, my wife, nor I can access this account. In fact, if my daughter chooses not to attend college, Mom can change beneficiaries. So, a 529 is ideal for what you have described.

By the way, your wife may have broken the law. Money in your child's name/SSN cannot simply be taken from the account at a parent's whim. You have every right to ask for an accounting of that money and insist she return it to your child's account.

Edit - I was going to add that UTMA money may only be spent for the benefit of the child, and not for day to day items, food, clothing, etc. The article The proper use of UTMA funds provides a bit of support to my position on that.

JoeTaxpayer
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