Thank you in advance to everyone who takes the time to read and respond.
This past tax season my parents provided a tax document for me (they’ve provided it every year but I’m only now starting to really pay attention). It was a 1099-div for an account that was in my name. The history is my parents set up this account for college savings (since 529’s weren’t around yet) under the Uniform Gift to Minors Laws. The bulk of it was in technology stocks which took a massive hit just as I was entering High School. Some of the funds were sold at a loss to pay for college (the capital loss carryover is still accounted for in my taxes to this day and I think that’s what is giving us an unusually high refund every year). After regretting that loss, my parents largely chose to just pay for college with cash as we went. The stock account has continued to sit and has now long since recovered its value and then some.
I called my mom to talk about the account and what their expectations are. In my mind, that money was for college and whether that particular account was used to achieve that is irrelevant. I am the oldest of four siblings and it sounds like there may be similar accounts for them as well. My mom and I decided that for now we’ll just sit tight until the whole family gets together and discusses these accounts and how and if they should be distributed. Complicating the issue is the fact that all the children have taken very different undergraduate paths with a wide range of tuition costs and scholarships, so trying to equitably calculate a “fair” distribution is probably impossible and unproductive. Another possibility is that we all just give back the account but this would ultimately result in a huge amount be lost to taxes in the short term from gift tax and long term since my parents are in a higher bracket.
In the meantime, I feel like I’ve been left in Limbo where I technically have all this money along with my parents’ blessing to use it but since I’ve never done anything to earn it I don’t feel right using it. Yet, the amount of money would very literally change our lives. Our plan for the near future is to, in order, pay off my husband’s student loans, buy a house, furnish and possibly update said house with cash, max out our retirement plans (we are currently saving for retirement, just not maxing), then start a family. Using this money would knock off about a year’s time of aggressive savings and loan payments and could quite possibly change our family tree if it means we get to that last goal that much sooner.
I’m stuck in a situation where I feel selfish and greedy for wanting to use the money and still prideful and stupid for not using it. It feels like I’m in some sort of parable about why it’s so important to be open and honest with your children about college education and the finances that go along with it.
Thanks again for reading. I hope so outside perspective can better ground me and point us in the best direction.