Baby mustache?

[fdubz]

My only brother and his wife are having a baby!  This will be the first baby in our family as my brother and I are the only offspring in a fairly large extended family.  My DH and I are comfortably on our way to FI in jobs we enjoy with no plans of having children. 
My question is, what accounts should we be looking at setting up for this much anticipated new family member?

There will be multiple people wanting to contribute for holidays, birthdays, etc. through the child's life. 
529s? Taxable? What else is out there tax advantage-wise?

Thanks in advance for advice and insight!

[Better Change]

My husband and I are in the same position and have a 15 month-old nephew.  We've also decided against having kids of our own.  My brother-in-law and his wife aren't rich by any means, but they're doing okay financially.  They're super frugal and have lots of side hustles.  Because of this, we don't feel like we need to give our nephew lots of cash or start savings accounts for him.  Instead, our goal is to spend as much time with him as possible, and when the situation warrants, use the money we have to help pay for experiences that he wouldn't necessarily get with his parents.  We want to be the "cool" aunt and uncle, not because we buy him things, but because we expose him to a lot.  He gets plenty of toys, but without us, he might not learn to fish or backpack or or or...you name it.

One thing I didn't realize is that you can contribute to a 529 for a niece/nephew or child's friend and transfer it to your own kid if you do eventually have one.  We're pretty much a "no" there, so it doesn't seem worth it to us.  And what if the kid doesn't want to go to college?  I'd rather give him a chunk of change later on that can be used for anything if he really needs it (house downpayment, starting a business, etc.)

[Linea_Norway]

Why does is need to be a tax advantage wise account? When we were children, we just had a normal savings account, with a booklet that showed how much was in there. Sometimes, the grandparents made a monetary gift to that account. We also emptied our piggy banks into it once a year or so. When I was 15, I used it to buy my first stereo tower.

I have also seen that my neighbour girls bought a trampoline from their own savings that came from grandparents on birthdays and such.

Isn't it so that parents are responsible for their children's bank accounts? In that case they can just prevent their children to empty the savings account without their parent's consent before the age of 18.

You could also consider an account that can invest in a low cost index fund. It should be easy for grandparents to add money to that account. Someone should then be able to buy the funds.

[EricEng]

Try a UTMA account.  If their parents are financially responsible, you could have them be custodian instead of yourself.  Taxes get more complicated if you (as uncle/aunt) are custodian of it as capital gains on the account have to be filed under the childs name if they are large enough.  You must use a UTMA because children can't have regular brokerage accounts as too young for stock contracts.  They get the full account value at 18-21 depending on local state.
https://budgeting.thenest.com/set-up-investment-account-niece-minor-31163.html

Alternatively, you can open a 529 for college savings and reduce your state income tax. 

Easiest and most flexible solution is probably just keep a separate brokerage account in your name that you lists them as beneficiaries in case you die.  Otherwise, gift it to them when you feel they are of age.

[GizmoTX]

I wouldn’t want a sizable amount to transfer at legal age, which an UTMA does.

We gifted $5,000 each to our 2 nephews when they were 2 in 1994 in the form of educational trusts. One paid out $20,000 for the nephew’s college tuition plus income tax. The other nephew didn’t complete college, so he will get the residual of the trust when he turns 30, which is currently $30K. Setting up the trusts was easy: a document drafted by an estate lawyer plus tax number application. I’m the trustee & invested in no-load indexed mutual funds. I file a 1041 every year. The trust pays any income tax but hasn’t had to for years as the gains are mostly appreciation; tax is due when funds are sold.

The nephew who didn’t go to college lives off a substantial UTMA gift from his grandparents, hasn’t worked since graduating HS 9 years ago, and still lives with his parents. Sad.