By- Marion Syversen
Let's say you think opening an account for your little pumpkin would be a great idea for Christmas. Let's look at the rules for some of the most common types.
Savings account- If you open a joint account with your little sweetie, that account is typically an UGMA account. UGMA stands for Uniform Gift to Minors and allows minors to own an asset because it is owned for them or with them. But when they are 18 years old it becomes their asset. You might think, "oh, this will be the money that I give junior for college," but in fact Junior can use it for his first car as soon as he is 18 years old. And Princess might give the money to her misunderstood boyfriend, and she would be within her legal rights to do so if you open an UGMA account for your kids or grandkids, since it becomes their money at age 18.
College savings account- If you open a 529 account for your little angel the UGMA rules will only apply if you are moving money from an UGMA account. If you are opening a new 529 account that account is held for the darling and is completely in the name of the account owner but can be used for your darling. The money can be used for post secondary schools such as golf or cooking schools, 2 year colleges, trade schools, anywhere that federal funds are accepted in the US and a few schools in Canada.
Disclosure:
Only securities and advisory services offered through Wall Street Financial Group, Inc. Registered Investment Advisor. Member FINRA/SIPC. Norumbega Financial and Wall Street Financial Group, Inc., are separate entities, independently owned and operated.
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