Originally Posted by
djflier
Good point. I will call next week to find out and report back. When I setup my wife's account there was a technical hitch with the login. I called to sort it out but they would only talk to her and not me unless she signed some sort of power of attorney.
I guess as long as you can setup the accounts online you can just take full control of the account and transfer money in and out etc. The only thing that may screw it up is their dates of birth may flag the enrollment. They have a social security number so that's the main thing.
The bigger issue could be if there is a similar technical problem as I had with my wife's account and they want to talk to the applicant/baby all they will get is "goo goo gah gah" so could be an issue....
Cheers
DJ
The bigger issue is a gift tax issue. When you open an account in their name and transfer the money, the money is theirs. There is a limit to how much you can give to each child per year, without having to file forms with the IRS. That limit is $13k lsat time I checked (Note, it's per person-person pair. So you can give child 1 $13k, and so can your spouse. And you both can give child 2 $13k, And Grandma can give both $13k, etc...)
As long as you would only be giving them $100k each (and you haven't done anything like this before) you wouldn't pay taxes now. But it would reduce the amount of your estate that would be free from estate taxes.
The second thing is that once you give them the money, it is theirs. You can take it back. They can do as they please with it. In a custodial account you can control it, but you have to use it for their benefit. (Though, there is no reason they can't pay for their food, day care, schooling, etc...). Plus, assets in their names will affect their ability to get financial aid for college much more than the same assets in your name. (Although, I'm guessing if you have $200k to move around for this, that might not be a big concern).
Finally, at least the Delta terms explicitly exclude custodial accounts.