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When is a good time to tell your child about their UTMA/UGMA?
Old 09-09-2022, 10:07 AM   #1
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When is a good time to tell your child about their UTMA/UGMA?

Hi all, Need a bit of parenting advice here.

We have a 529 and a UTMA for our 17 year old with about $100K in each one. He's looking at attending a local, public college so I don't anticipate needing more than what's in the 529.

Just looking to hear some opinions on when is a good time to tell him about the UTMA money and how you handled it.

I think he would be responsible with it and we would insist on being POA but I'm unclear whether to tell him about it now or closer to the age of majority in my state which is 21.

Thanks for sharing your opinions and experiences
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Old 09-09-2022, 11:28 AM   #2
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Don't have that experience as we used both our UTMAs and 529s for kids' college (plus a lot more). But I would lean towards saying "we have money saved for your college education, and if it turns out to be more than you actually need, we'll talk about that when the time comes". Could be useful for grad school or house down payment, just for examples. Good for you to have this problem!!!
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Old 09-09-2022, 11:38 AM   #3
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Not really precisely on point, but I have tried always to talk to my kids about money during their entire lives (they're now 27, 22, and 20). I've tried to be honest and accurate, of course. I've also tried to start with simpler things and build to more complex things, and more general comments to more specific ones. I've tried to move the conversation forward by sharing more information as time goes by.

But I've also tried to do a just in time approach, where I share information just a bit before they need to know it. I find their interest level and comprehension level rise greatly when I can connect it to something that's relevant to them.

I also try to share values and lessons along with the facts.

So in your situation, I would first make my kid aware of the 529 and the UTMA, and that the money in the 529 is for college and the UTMA is for college if needed then could be used for a house downpayment or a wedding or a car or whatever it is your family values are and your intentions were.

Then at some point in the next few years I'd probably sit down and show him actual statements with account values and tell him about the age 21 thing, and show how much the college costs are so he can understand the math and how much would be left over. How soon before age 21 sort of depends on the kid and his money personality, but I'd probably at least do a year or two so he has a chance to absorb the news and think through all of his options and allow for time for you and him to have conversations about what to do with the UTMA money.

Insisting on POA is an interesting thought. I have been going the opposite direction with my kids lately. I used to fear them making mistakes with their money and thought I knew more, so I tried maintaining control. Then I realized a few things. First, everyone makes mistakes, especially starting out in a new area. Second, making mistakes early is how they learn. Third, making mistakes early usually involves smaller dollar amounts which are usually not fatal to long term financial health. Fourth, making mistakes while I'm still around and having it be an open topic means I have the opportunity to share my values and discuss with them and learn about their values (which sometimes trump what I think is best to do in some financial situations).

So now my kids are making more and bigger financial decisions on their own. Nearly all the time they do very well. Sometimes they make minor errors, but usually only once and then they course correct because it's their mistake, not mine. Very occasionally I'll disagree with their intended course of action, but they are adults and are the ones who will have to live with the consequences, not me. It also helps turn our relationship into an adult-to-adult relationship rather than parent-child, which is intimidating at first but awesomely wonderful as time goes by.
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Old 09-09-2022, 12:19 PM   #4
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Similar to SecondCor521, my philosophy is to teach kids from early on, build their knowledge/understanding incrementally, and be open with them about money, priorities, and decision-making.

Our kids are still fairly young (7, 5, 1), so I haven't been there yet. But my intention is to start teaching my 7y/o within the next year or two about money, saving for the future, how to be responsible with/for money, etc. It'll obviously start simple, but I do plan to tell each of them about their 529s & UTMAs fairly early -- like maybe around 13-14y/o? Old enough for them to start understanding what investments are, how we manage them, etc. Once they're aware generally of how investing works, that's when I expect to layout exactly what we have for them (as long as they're reasonably mature/responsible, insomuch as a teenager can be). At that point, we can start to involve each kid in the management of their own accounts, all the while teaching (read: brainwashing) them about how we intend for them to use that money responsibly. With luck, the majority age will be a non-event. They'll already have been involved with managing that money, and should have plans for how it's gonna get used (college, car, house, whatever).
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Old 09-09-2022, 09:03 PM   #5
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Hi all, Need a bit of parenting advice here.

We have a 529 and a UTMA for our 17 year old with about $100K in each one. He's looking at attending a local, public college so I don't anticipate needing more than what's in the 529.

Just looking to hear some opinions on when is a good time to tell him about the UTMA money and how you handled it.

I think he would be responsible with it and we would insist on being POA but I'm unclear whether to tell him about it now or closer to the age of majority in my state which is 21.

Thanks for sharing your opinions and experiences
I think it's good to be upfront with kids about parents' resources available (whether 529 or other sources) for college tuition. This way they can have a realistic expectation in choosing their college and also figure out additional funding sources if needed.

In our case, we have two kids in high school. We have told them we have the resources to send them to whatever college they wish to attend and would also fully fund their postgraduate studies (law school, medical school, business school, etc.) if they choose to go further.

In return for our unlimited support, however, they will be expected to pursue degrees that have good job prospects. For example, we absolutely won't fund a degree with poor job prospect at an Ivy League school or fancy liberal arts college if there's no clear career path upon graduation. But if they want to go to, say, Stanford for an engineering degree, we would absolutely fund that. Or if they want to pursue a political science degree at Harvard with the goal of going to law school afterward, we would absolutely fund that. If they want to pursue an English degree at a state college with view of becoming a teacher, we would happily fund that as well, etc.

We've had multiple conversations with them about our expectations and they are fully aware of and in agreement with our approach.

As far as teaching them about money matters in general, we've been upfront with them about our financial situation and have transferred some assets to them. Our goal is to get them educated early on about personal finance and money management and help them through the learning process. We want to see them "in action" in terms of how they approach money early so we can provide guidance and correct mistakes and help them cultivate good money habits. We think this is a much better way to pass our wealth to our heirs instead of dumping a big pile on their laps without warning or guidance upon our death.
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Old 09-10-2022, 01:36 AM   #6
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We didn't have a lot of discussion early on, but when DD mentioned she wanted to move out with her friends @ 18, we sat down with her and made a budget for expenses she could expect & the addition of tuition (different county, more for first 2 years of college). She decided she wouldn't have fun as she didn't make enough money to afford to have fun...

Our one stipulation for college was to get her basics @ community college and then transfer to a state school & live/study @ home. Outside of this scope, she would be responsible for the difference. We were a bit strict on the opportunity as we were afraid of her staying focused on why she was there, not in the "experience"...
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Old 09-10-2022, 02:34 AM   #7
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We told ours at about 15 or so. We wanted them to contemplate what type of school they would attend. Not just "free money" but THEIR money! We wanted them aware and thinking. Worked for one child but not the other!
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Old 09-10-2022, 04:21 AM   #8
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I think I'm the outlier here: I would not tell your son, at this point. I agree with the idea to let him know you've saved for his college. Therefore, he should decide (with your input) on a college based on what fits his needs and desires, and then you both can look at the finances for that college selection. After he starts his senior year, then let him know what the balance will be.
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Old 09-10-2022, 07:53 AM   #9
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I think I'm the outlier here: I would not tell your son, at this point. I agree with the idea to let him know you've saved for his college. Therefore, he should decide (with your input) on a college based on what fits his needs and desires, and then you both can look at the finances for that college selection. After he starts his senior year, then let him know what the balance will be.
I agree with not telling about the 2nd account until he reaches the age of 21.
It will not be something that he should just pull out and spend, so the longer he is unaware, the better in my book. I have an account for a great niece that her parents are aware of, but the niece is just 1 year old.
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Old 09-10-2022, 08:02 AM   #10
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Cover the bills until he has finished.

How do you know that he will not pursue post graduate studies?

If there if money left when he is finished then tell him about it.
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Old 09-10-2022, 01:26 PM   #11
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In return for our unlimited support, however, they will be expected to pursue degrees that have good job prospects. For example, we absolutely won't fund a degree with poor job prospect at an Ivy League school or fancy liberal arts college if there's no clear career path upon graduation.
Admittedly college is a lot more expensive than it was in the 1970s and 80s, but my parents had the opposite approach. They would fund any college at any level at any time in their kids' lives, and pay their living expenses while they were in school.

When I went to college, I signed up as an accounting major in the business school because I'd done really well in my college bookkeeping class. I had to take economics, and I loved it. I remember calling my parents later that year and telling them I'd changed my major to economics. My father said "Oh no!" at the exact same moment my mother exclaimed, "Good!" Poor guy just couldn't hide it.

They preferred that we go out of state to school, to broaden our horizons. So I transferred and did indeed graduate with a useless degree in economics.

I went to graduate school, as many people with useless degrees do, but didn't like it so I dropped out after only one semester, and did a 180 and took a couple of classes at the community college--air conditioning & refrigeration and building trades.

I was the only girl in either one. I did a fabulous job on our oxyacetylene welding project, and produced a Rube Goldberg looking arrangement of copper tubing with the required number of soldered joints and connections. Mine was the only one that didn't leak. The teacher attributed it to my being experienced with fine details like sewing.

At the information session for apprentices at the carpenters' union, the guy looked at me in the group and said they didn't cotton to not coming to work because of monthly problems.

I got a job as a file clerk at a state agency. My degree actually worked against me, because the supervisor was convinced I wouldn't stay long. She obviously didn't know anything about economics degrees, but it turned out she was right--the director of the division snapped me up after only about six months to work in the front office.

Eventually I decided to go to law school, at a very prestigious state school. I was accidentally made privy to the law school's decision process when I was talking to the dean of students about whether I should start in the summer or wait until the fall. I found out that my degree in economics worked in my favor, because it was different from all the business and political science degrees applicants had.

And being a resident of the state but having a degree from an out-of-state school worked in my favor, because they were limited on the number of out-of-state applicants they could admit, and this was a better-than-nothing substitute.

And not being straight out of college worked in my favor.

Now, this was a long time ago, before there was such curation done in anticipation of applying to colleges and law school and the like. And I'm sure all of the decision making is now noodled out by algorithms and counselors and whatnot. But I did end up in law school, which is considered acceptable by most people, and my serpentine path was undoubtedly full of valuable, real-world experience.

Just goes to show you never know. And my parents never said a word during any of this.
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Old 09-10-2022, 03:38 PM   #12
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Admittedly college is a lot more expensive than it was in the 1970s and 80s, but my parents had the opposite approach. They would fund any college at any level at any time in their kids' lives, and pay their living expenses while they were in school.

When I went to college, I signed up as an accounting major in the business school because I'd done really well in my college bookkeeping class. I had to take economics, and I loved it. I remember calling my parents later that year and telling them I'd changed my major to economics. My father said "Oh no!" at the exact same moment my mother exclaimed, "Good!" Poor guy just couldn't hide it.

They preferred that we go out of state to school, to broaden our horizons. So I transferred and did indeed graduate with a useless degree in economics.

I went to graduate school, as many people with useless degrees do, but didn't like it so I dropped out after only one semester, and did a 180 and took a couple of classes at the community college--air conditioning & refrigeration and building trades.

I was the only girl in either one. I did a fabulous job on our oxyacetylene welding project, and produced a Rube Goldberg looking arrangement of copper tubing with the required number of soldered joints and connections. Mine was the only one that didn't leak. The teacher attributed it to my being experienced with fine details like sewing.

At the information session for apprentices at the carpenters' union, the guy looked at me in the group and said they didn't cotton to not coming to work because of monthly problems.

I got a job as a file clerk at a state agency. My degree actually worked against me, because the supervisor was convinced I wouldn't stay long. She obviously didn't know anything about economics degrees, but it turned out she was right--the director of the division snapped me up after only about six months to work in the front office.

Eventually I decided to go to law school, at a very prestigious state school. I was accidentally made privy to the law school's decision process when I was talking to the dean of students about whether I should start in the summer or wait until the fall. I found out that my degree in economics worked in my favor, because it was different from all the business and political science degrees applicants had.

And being a resident of the state but having a degree from an out-of-state school worked in my favor, because they were limited on the number of out-of-state applicants they could admit, and this was a better-than-nothing substitute.

And not being straight out of college worked in my favor.

Now, this was a long time ago, before there was such curation done in anticipation of applying to colleges and law school and the like. And I'm sure all of the decision making is now noodled out by algorithms and counselors and whatnot. But I did end up in law school, which is considered acceptable by most people, and my serpentine path was undoubtedly full of valuable, real-world experience.

Just goes to show you never know. And my parents never said a word during any of this.
That's a great story. Thanks for sharing. For what's worth, I definitely think Econ is a very useful degree

Coming from math/engineering degree background, I definitely had a bit of bias against liberal arts degrees mainly because I saw a few friends with these degrees struggle to find decent paying jobs after graduation. Speaking for myself, I love history and would have loved to major in history in college. But I also knew that unless I wanted to get into academia (which I had no interest), my job prospect would be poor upon graduation. So I went into math/CS, something I was good at but certainly didn't love, and easily got a good job upon graduation to get my career started.

I agree with your parents about broadening one's horizon and college is a perfect time to do it. When our family went to the UK for vacation this summer, we visited Oxford and one of my kids loved it there, so I told him I would be more than happy to send him to Oxford if he could get in. But he needs to have a goal in mind. He can't just go to Oxford for the sake of going Oxford; he has to figure out what he wants to learn and how that's going to help him launch his career after college---if he wants to major in English literature and be a teacher after graduation, that's a good plan. But if he wants to major in English literature just because he likes literature but doesn't know what he wants to do after college, that's a bad plan.

---A lot of parents push their kids to be doctors, lawyers, engineers, etc. for the prestige and money because that's how they define success. Thankfully I'm not biased in terms of their careers. I told my kids they can be whatever they want, as long as they can support themselves and their families and be productive and contributing members of society.

A lot of times, it takes kids a few years to figure out what they really want to do in life, and as parents if we can help him along in the process (and try to shorten it if possible), that would be great. Unfortunately, some kids never figure it out.

In stark contrast to your story of ultimate success, I'll offer one of abject failure. I knew a guy named "George" in college. We started in the same year. I graduated in 4 years and he didn't. He majored in business and had one class left to complete his degree but refused to take it. Instead, he dragged out the process by taking random classes unrelated to his degree, semester after semester; his parents paid for everything so he didn't have to work, and he was enjoying college way too much to want to graduate. I eventually heard from a friend that 6 years after my graduation, he was still there, taking a tennis class.

I related this story as a cautionary tale to my kids, and told them, "Be anything you want in life, but please don't ever be a George."
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Old 09-11-2022, 11:34 AM   #13
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We supported our son in university and to a certain extent, as requested, in graduate studies.

He did not pursue the career that I would have wanted him to. We let him choose the course in life that made him happy, not us. And it did. I was wrong to wish him something that would not make him happy with his lot in life.

The notion of basing our financial support contingent on his course of study never entered our minds.
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Old 09-11-2022, 12:17 PM   #14
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We supported our son in university and to a certain extent, as requested, in graduate studies.



He did not pursue the career that I would have wanted him to. We let him choose the course in life that made him happy, not us. And it did. I was wrong to wish him something that would not make him happy with his lot in life.



The notion of basing our financial support contingent on his course of study never entered our minds.
I appreciate that sentiment but I think it only goes do far. I recall a colleague of somewhat limited means who let his daughter choose an out of state school to study dance at Dad's cost.

Another paid for in-state for his daughter to study art. I am sure both are very talented, but these are highly competitive fields with limited prospects for gainful employment.

Neither has found employment tied to her major and future prospects look sparse.

I would certainly be reluctant to fund something like that. These kids are 17 or 18. Their ability to make those decisions at that age may not be what it could be, and if Bank of M&D is financing it, they may have little skin in the game other than pursuing something they enjoy.

Just another view.
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Old 09-11-2022, 12:34 PM   #15
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Thanks very timely. I have a 12 and 10 year old and I'm contemplating when to start having this discussion. I am thinking soon maybe this year actually with the 12 soon to be 13 year old. Explaining what we have and what choices she can make. She's on the spectrum and very anxious and my DH has a hard time not joking about everything. I can tell he's making it worse so I'm thinking about just sitting down and discussing with her all the options. She's very smart and I think she will need a smaller setting for college than a big public school which is what we always "budgeted for". I didn't expect to have a kid that would need more support but I do so I don't know that you can predict how things will work out.

And yes we don't have to support her but we can afford it and I want to do it.
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Old 09-11-2022, 12:55 PM   #16
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DW and I regularly discuss finances in the house with no attempt to hide it from DD. Part of that is the 529 plan and other college savings. I think an important thing for a young person to know is that money doesn't just all of the sudden appear, that it requires work and time to accumulate. I heartily endorse SecondCor's approach.
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Insisting on POA is an interesting thought. I have been going the opposite direction with my kids lately. I used to fear them making mistakes with their money and thought I knew more, so I tried maintaining control. Then I realized a few things. First, everyone makes mistakes, especially starting out in a new area. Second, making mistakes early is how they learn. Third, making mistakes early usually involves smaller dollar amounts which are usually not fatal to long term financial health. Fourth, making mistakes while I'm still around and having it be an open topic means I have the opportunity to share my values and discuss with them and learn about their values (which sometimes trump what I think is best to do in some financial situations).
With the other replies, we can see that there are a lot of paths to success, and usually involve some mistakes and hardship along the way.
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When is a good time to tell your child about their UTMA/UGMA?
Old 09-11-2022, 10:01 PM   #17
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When is a good time to tell your child about their UTMA/UGMA?

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I appreciate that sentiment but I think it only goes do far. I recall a colleague of somewhat limited means who let his daughter choose an out of state school to study dance at Dad's cost.

Another paid for in-state for his daughter to study art. I am sure both are very talented, but these are highly competitive fields with limited prospects for gainful employment.

Neither has found employment tied to her major and future prospects look sparse.

I would certainly be reluctant to fund something like that. These kids are 17 or 18. Their ability to make those decisions at that age may not be what it could be, and if Bank of M&D is financing it, they may have little skin in the game other than pursuing something they enjoy.

Just another view.


Or it could work out well. My insurance career parents had no experience of art based employment and worried about me going down the path of art and design education, dragging it all the way to Masters college, where I met my artist future wife.

Two artists! Oh dear.

My dad was (happily) more confused than ever when we developed successful careers in the animated movie field and FIREd (in both senses) in our early 50ís

If you are curious the Animation Guild publishes an annual wage survey for the many jobs in this field

https://animationguild.org/wp-conten...-839-WAGES.pdf
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Old 09-11-2022, 10:33 PM   #18
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Or it could work out well. My insurance career parents had no experience of art based employment and worried about me going down the path of art and design education, dragging it all the way to Masters college, where I met my artist future wife.

Two artists! Oh dear.

My dad was (happily) more confused than ever when we developed successful careers in the animated movie field and FIREd (in both senses) in our early 50ís

If you are curious the Animation Guild publishes an annual wage survey for the many jobs in this field

https://animationguild.org/wp-conten...-839-WAGES.pdf
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Old 09-11-2022, 10:42 PM   #19
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Hi all, Need a bit of parenting advice here.

We have a 529 and a UTMA for our 17 year old with about $100K in each one. He's looking at attending a local, public college so I don't anticipate needing more than what's in the 529.

Just looking to hear some opinions on when is a good time to tell him about the UTMA money and how you handled it.

I think he would be responsible with it and we would insist on being POA but I'm unclear whether to tell him about it now or closer to the age of majority in my state which is 21.

Thanks for sharing your opinions and experiences
Interesting situation. I note that some posters have missed your actual question. You have a 529b over which you will always control disbursements and your son will likely attend a local public school where the 529b will cover the costs and so far you have no issue with a likely major. Great! Check off school selection and paying for it.

But you also have a large UTMA which you temporarily control but will lose all control of when your son reaches 21 years of age. Since you've kept this from him to this point and in four years, if he desires, you'll be out of the picture, IMHO it's time to get him up to date on the strategy of you opening and funding the UTMA. Perhaps leave out the amount in early discussions but do emphasize possible uses for the money depending on how things work out for him.

I have a 16 year old grandson but we focused more and earlier on his 529b and ESA which now will easily cover his undergraduate degree and, likely, grad school if he desires to go. But we started his UTMA only recently. I put a few kilobux into a custodial account at Schwab and our deal is he owes me that money until he works it off. Whenever he does chores for us, he keeps a log and I relieve him of $20 of debt for each hour he works. (We're pretty liberal on what we call work and in rounding up hours.) If he wants some cash pocket money instead, he can have that but at only $15 per hour. So far, he has strongly preferred the $20/hour situation. So, he's been aware of the custodial account from the get-go, unlike your situation. He knows that at 21, the law says the account becomes his. We work on investing the money together and talk about it from time to time. He has view-only access to the account.

OTOH,grandson is not aware of the size of his educational accounts and our dilemma is when/if/how to let him know (if at all) that he can go to most any school. The money is there. He's frugal by nature and mentions budgeting as part of his educational planning when we chat about it, so I'm not too concerned. And, of course, with educational accounts I'll have control of disbursements forever.

With your 17 year old son's $100k UTMA account, you have the age 21 deadline rushing up in about 4 years. I'd suggest it's probably time to start bringing him into the loop pretty soon, errrrr....... maybe very soon. Only you can try to predict how responsibly he'll handle the situation, the level of interest in investing he'll have, etc.

That much money must throw off significant taxable earnings. How have you handled the income taxes without him being involved?

Have you looked into converting some of it to a Roth commensurate with whatever earned income from summer jobs, etc., he might have?


Edit: You mentioned insisting on having POA. I think you'll find that's up to him at 21. It'll start as the UTMA converting to be his individual account then and if he wants to grant you POA he can.
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Old 09-12-2022, 01:02 AM   #20
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Originally Posted by mystang52 View Post
I think I'm the outlier here: I would not tell your son, at this point. I agree with the idea to let him know you've saved for his college. Therefore, he should decide (with your input) on a college based on what fits his needs and desires, and then you both can look at the finances for that college selection. After he starts his senior year, then let him know what the balance will be.
You might be misunderstanding OP's question. There is a 529b which will fund his son's college education. There is also a substantial UTMA which will become the son's at age 21 for the son to use for whatever he wishes. The son is unaware of the UTMA now. How and when should the OP bring the son up to speed on his upcoming good fortune?
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