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| Title: | Market Investing |
|
| Moderator: | 2155::michaud |
|
| Created: | Thu Jan 23 1992 |
| Last Modified: | Thu Jun 05 1997 |
| Last Successful Update: | Fri Jun 06 1997 |
| Number of topics: | 1060 |
| Total number of notes: | 10477 |
978.0. "Investment Question - Uniform Gift/Transfers to Minors..." by AIAG::MOORE (Jim Moore) Thu Feb 15 1996 16:42
My 3 children (high school sophomore, freshmen, 5th grade)
each were willed ~10k. I intend that they apply it to their college
education eventually. I have a number of choices:
a. Invest in my name and pay the taxes at my rate.
b. Invest in their names under a custodial account. An account
which is opened in the name of a minor under the Uniform Gifts to Minors
Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) offers tax
benifits.
First $650 unearned income tax free but the money must be
applied to education.
c. Create a trust for each child.
-----------------------------------------------------------------
I'm leaning toward b. (via Fidelity College Saving Plan, see
http://www1.fid-inv.com/planning/college/college.html) but understand
that when applying for scholarships it is assumed that all of the childs
assets will be applied to college and only a portion of the parents. Is
the money better kept under my name?
Any advice would be appreciated.
Q: If I go with b. what would be the prudent allocation, 1K
increments, for each child. Inveted for: 2-6 years, 3-7 years, 7-11
years. I'm concerned that the market will correct down 2 days after I
open their accounts.
Q: does anyone know what the tax penalties of using the money
from the custodial account for non-educational purposes?
| T.R | Title | User | Personal
Name | Date | Lines |
|---|
| 978.1 | Xref | 2155::michaud | Jeff Michaud - ObjectBroker | Thu Feb 15 1996 16:55 | 2 |
| 150 MINAR::BISHOP 9-APR-1992 8 IRAs for minors: rules and regulations?
206 LANDO::OBRIEN 19-MAY-1992 5 Gifts to Minors
|
| 978.2 | +/- of a Trust | SUBSYS::DONADT | | Fri Feb 16 1996 15:00 | 17 |
| Choice c may be worth considering for your younger children since a trust
is not part of your assets or your children's. Trusts are seperate entities.
There are a few negatives for trusts, though...
1. Trusts are taxed at a higher rate
2. You will want to hire a lawyer to set up the trust.
3. Trust income is reported to the IRS on a 1041 Fiduciary return
and Form 2 to Mass DOR (providing you are in Mass). If you are not
willing to do these tax returns yourself, it may not be worthwhile
paying someone else to do them and therefore you may not want to
set up a trust.
Ray
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