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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Del Griffith on November 27, 2016, 05:58:42 PM

Title: Investment accounts for kids
Post by: Del Griffith on November 27, 2016, 05:58:42 PM
This question has been coming up within my and DH's families for a little while now. We now have three nephews 3yo and under. As birthday/holiday gifts for the kids that have everything, we decided to open custodial brokerage accounts that DH is named the custodian on and only we contribute to. My DH can see them and manage them when he logs onto his account. All three children now have them. My brother also opened two of his own accounts for two of our shared nephews as well.

We have been running into a few issues recently. As mentioned, these accounts are linked directly to my DH and I. Other family members have expressed an interest in contributing to these while the kids are young to avoid buying crap that will end up in the back of the basement. Since money is coming directly from us to the child and we are the custodians, family members want to hand us cash that we would then deposit into the account on their behalf. At the risk of sounding like a scrooge, I don't want us to contribute $1000 over the years and then another family member to contribute $50 only to have the child be told 'happy 18th birthday -- here is $1050 (ignoring any capital gains) from these three family members' when we have clearly put in way more and showed up seemingly empty handed for events.

One set of parents recently decided to open a 529 for the child, which DH is not a fan of. In my mind, this at least gives other family members the opportunity to contribute to an investment account without needing the money to go into our custodial accounts. And with the other set of parents who don't have a 529, this still leaves other family members with the option of either setting up their own custodial account, or trying to get in on ours which we would prefer doesn't happen, or continuing to buy crappy unneeded gifts.

Has anyone come across a similar situation? What was the solution you came up with? Is there another account we haven't considered?