You are wrong if you think that your UGMA [Uniform Gift to Minors Act] account for your child's college tuition is taxed at the child's rate. That only comes at age 14. Until then, it is taxed at your top rate. Furthermore, a sizable UGMA disqualifies your child for financial aid and work study programs. The worst mistake of all is what my accountant had me do: cash in my daughter's stocks in January of her junior year of high school. That completely wrecks your chances for financial aid. Most financial advisers know NOTHING about paying for college. Take a tip from a mom of two in college: Keep the money and pay the taxes. You'll be better off in the long run.
-- Melissa Sedlis
While the taxes on one's own savings account are higher than an account under your child's name, the net result may be more in your favor.
Typically, college financial aid departments assume that one can spend 30 percent of one's savings in a given year, but only about 15 percent of a child's savings.
That might very well eat up the difference in taxes.
-- Matthew G. Saroff
We put all of our kids' college money in various investments requiring me or my wife to sign them, along with a friend of ours considered to be the most moral person we know. This way, 16-month-old Dash (siblings in development) won't have a windfall at age 18, and we won't put an extension on a house we don't own yet.
As to building these accounts into enough money that will pay for college, that's another quandary.
-- Jonathan Green
In response to Jon Bowen's article about the cost of a university education: Want to know a little secret? Send your kids to a Canadian university: cheaper, safer, great education.
-- Carla Winterbottom
Jon Bowen writes that there's nothing he can do "if [his daughter] decides to blow the cash [in the UGMA account] on some badass SUV, or new breasts, or a yearlong outback jaunt with her heavily tattooed boyfriend."
In fact, there IS something he can do. He can raise his daughter with values that lead to appreciating an education over SUVs and tattooed boyfriends.
Bowen closes his article gently chiding himself for not having more faith in his daughter. Nice touch, but this only illustrates that he, as so many other parents today, fail to understand the cause and effect connection at work here: Good or bad, children turn into what their parents or guardians make them into.
-- Walt Roberts
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