Author Topic: Rediscovered Investment Account, Keep or Give Back?  (Read 2543 times)

Dezrah

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Rediscovered Investment Account, Keep or Give Back?
« on: February 25, 2014, 09:43:26 AM »
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 (theyíve provided it every year but Iím 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 529ís werenít 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 thatís 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 weíll 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 ďfairĒ 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 Iíve been left in Limbo where I technically have all this money along with my parentsí blessing to use it but since Iíve never done anything to earn it I donít 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 husbandís 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 yearís 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.

Iím 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 Iím in some sort of parable about why itís 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.

MustachianAccountant

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Re: Rediscovered Investment Account, Keep or Give Back?
« Reply #1 on: February 25, 2014, 09:52:35 AM »
You didn't directly ask a question, so I'm going to assume the question is as follows:
Should I keep money that my parents had intended for me to use for education, but I instead used "different" money that was also theirs?

Sounds like you would feel guilty keeping it? Why don't you wait until you have your family discussion, and be open and frank. Your parents may be ok with you just keeping it. As a thank you, maybe you could use some of the money to take them on a nice vacation every year - one they wouldn't buy for themselves.

Another option is, with your parent's blessing, save that money for your own children's education. Even if you don't have kids yet.
A final alternative, if no one feels right keeping the money, would be to endow a university's scholarship fund.

Cromacster

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Re: Rediscovered Investment Account, Keep or Give Back?
« Reply #2 on: February 25, 2014, 09:54:17 AM »
In a quick answer I'd say.  If it's in your name and you've been filing/paying/deducting taxes on it.  Its yours.  Use it.

Everybody gets dealt a hand in life.  Your hand included some forward thinking parents that had the means to pass some down to you.  I don't think you need to feel guilty about it.  And you don't seem to feel guilty about selling some to pay for college then your parents paying cash for college.  Why the feelings now?  Be grateful for what you have.  Especially since it seems like it could give you a huge bump on your path going forward. 

My answer might be different if your parents were in financial hardship, but that does not seem to be the case.

If your other siblings don't have similar or comparable accounts setup, you could give it to help them out through college.

Edit:  Or as a previous poster stated:

Another option is, with your parent's blessing, save that money for your own children's education. Even if you don't have kids yet.
« Last Edit: February 25, 2014, 09:56:05 AM by Cromacster »

SwordGuy

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Re: Rediscovered Investment Account, Keep or Give Back?
« Reply #3 on: February 25, 2014, 10:02:59 AM »
If I understood correctly, your parents set up an account for you to use for college, then paid for (most of) college with funds from another source.

Legally, the money in the account is yours.

But we're talking about your parents, who've done nothing wrong in this regard, so legality be damned.

If they need the money, give it back.  It's the right thing to do.

If they don't need the money for their own retirement, enjoy it.

(And set aside some of it for expenses so you can afford to visit them more often!)

soccerluvof4

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Re: Rediscovered Investment Account, Keep or Give Back?
« Reply #4 on: February 25, 2014, 10:05:27 AM »
Could you tell your mother what your intentions would be with the money and if she gives you her blessing would you be fine with that? Seems to me she (from the way you have it written) is more opt to just push the matter off. I would just ask once and see how she answers. Cant hurt and if she says sounds good then go on guilt free. Present it like you did to us about what you want to do with the money.

Catbert

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Re: Rediscovered Investment Account, Keep or Give Back?
« Reply #5 on: February 25, 2014, 12:58:15 PM »
If this was a Uniform Gift to Minors account then by law it's your money and has been since you were 18 (21 in some states).  Hence, the 1099s.  If your parents need the money for their retirement then, sure, figure out how to give it back to them. Otherwise, I'd take it and do something sensible with it. 

Whatever you do remember that its your money.