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My dad wants to gift $13,000 to my daughter, but she is 2 yrs. old. How can I accept this on her behalf?

Boston, MA |

Since she is only 2, I can't open a bank account in her name. I know I could put the money into an education fund, but I don't want to do that. What are my options? Can I keep the money in my account? will I be legally liable if I were to use it for personal expenses?

Attorney Answers 6

Posted

I would suggest opening a money market account or other joint account (if possible) with her. Another alternative is to purchase bonds in her name. You really have a lot of options if your father wishes to ensure that the funds are in your child's name.

I invite my colleagus to weigh in as well.

I wish you all the best.

LEGAL DISCLAIMER: I am licensed to practice law in the Commonwealth of Massachusetts and have an office in Waltham. My practice is focused in the areas of family law, estate planning, probate, elder law, landlord-tenant and employment law. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. Please contact me with questions and concerns at: (T): 781-647-8100 (E): josh@ccrlawgroup.com I wish you all the best.

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Steven J. Fromm

Steven J. Fromm

Posted

Wow. You have the choice of 4 really fine estate attorneys in your area. You would be well served to call these attorneys who clearly know their stuff and can help you.

Posted

You can open a bank account in your daughter's name, but the account would be set up by the bank as a custodial account, governed by the Massachusetts Uniform Transfers To Minors Act (Chapter 201A). When you open the account, you can name yourself as the custodian, and the money in the account can only be used for the benefit of the minor. As custodian, you are allowed to collect, hold, manage, and invest the money for the minor's benefit, but you must keep an inventory of records of any transactions concerning the account. When your daughter reaches the age of 14, she would have the right to ask for information about the account.

Doing it this way at least buys you time, since you can just let the money sit in that account until you decide to put it somewhere else for her, like an education fund or a trust.

Hope this helps.

This answer is in response to a general legal question and is intended for informational purposes only. It does not constitute legal advice. Use of this website and its e-mail link does not create an attorney-client relationship with Attorney Mekdsy. Messages with confidential information should not be sent to Attorney Mekdsy via the e-mail link. The information provided in this answer must not be used as a substitute for consulting with an attorney. Brian Mekdsy is licensed to practice law in the Commonwealth of Massachusetts only.

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Steven J. Fromm

Steven J. Fromm

Posted

Wow. You have the choice of 4 really fine estate attorneys in your area. You would be well served to call these attorneys who clearly know their stuff and can help you.

Posted

Both attorneys offer sound advice. Setting up custodial accounts is the simplest way to go but understand if the fund builds up she may be getting a large amount when the account must terminate in many states at age 21. This could be problematic but maybe not. You should speak with an estates attorney directly as the totality of your situation may call for other strategies.

LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/> Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question. Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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Posted

You have so many wonderful options.

You could put the money into a specific account and then make a provision in your estate plan for the distribution of that account to your daughter.

You could also place the money in trust, which may be a good idea if your father intends and wishes to make additional gifts in the future.

I think if your father gives you money to hold for the child, you want to be very careful if and how you use it. Later on, your decision on how to handle that money could cause conflict both with your father and your daughter.

This is a great problem to have! $13,000.00 for a 2 year old is a wonderful thing, now sit down with an estate planning attorney and make sure it is protected for you and for your daughter!

Christopher Vaughn-Martel is a Massachusetts lawyer with the firm of Vaughn-Martel Law in Boston, Massachusetts. All answers are based on Massachusetts law and the limited facts presented by the questioner. All answers are provided to the general public for educational purposes only and no attorney-client relationship is formed by providing an answer to a question. To schedule a consultation with a lawyer, and obtain advice and review of your specific legal issue, please call us today at 617-357-4898 or visit us at www.vaughnmartel.com.

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Brian C. Snell

Brian C. Snell

Posted

I would also add that should you decide to put the money in your name jointly with your daughter, you need to understand that money could still be called marital property down the road in the event of a divorce (if you are currently married). So these options will provide better protection to ensure that your daughter benefits from the gift.

Steven J. Fromm

Steven J. Fromm

Posted

Wow. You have the choice of 4 really fine estate attorneys in your area. You would be well served to call these attorneys who clearly know their stuff and can help you.

Posted

If your parents are still working, they might also want to consider a 529 college savings plan as part of the gift. It has some preferential tax treatment for them. If they do not want to do this, the other attorneys are right that a UTMA custodial account, savings bonds are good one-time options and trusts may be feasible if this is just the start of a long-term gifting plan.

Attorney Rosenberg is admitted to practice in Connecticut and Massachusetts, and currently practices in South-Central Connecticut with an emphasis on estate planning, elder law, probate, and tax matters. He may be contacted confidentially by email at Scott@ScottRosenbergLaw.com or by phone at (203) 871-3830. All correspondence through this website appears publicly, is not confidential, and does not create an attorney-client relationship between you and Atty. Rosenberg. Discretion should always be employed when posting personal information online. ~~~~~~~~~~~~~ All online content provided by Atty. Rosenberg on this and other websites is provided for general informational purposes only, and does not constitute legal advice. All content is general in nature. Attorneys are unable to ask the questions necessary to fully understand the legal issues faced by any particular poster. Postings and responses to questions only provide general insights on the topic discussed. They are not tailored to any reader’s specific situation, will not be accurate in all states, and are never updated or maintained to reflect changes in the law. No person should take action based on the information provided by anyone on Avvo.com or any other law-themed website without first consulting a local attorney with significant experience in your area of concern. Persuant to Circular 230, no online content may be used by any person to avoid taxes or penalties under the Internal Revenue Code.

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Steven J. Fromm

Steven J. Fromm

Posted

Wow. You have the choice of 4 really fine estate attorneys in your area. You would be well served to call these attorneys who clearly know their stuff and can help you.

Posted

Your father intends this money to be a gift for your daughter. If you put the money in your account, it is subject to the claims of creditors, (car accident, business failure, nursing home spend down, divorce, etc.). I am certain you would feel horrible if this asset which you consider to be your daughters was taken by a creditor. A joint account is exposed to both parties creditors, don't go there.

A UGTMA account is a good idea, but has several draw backs. If you are custodian (likely) the assets of this account are included in your estate for estate tax purposes. As soon as your daughter turns 21 the account is her's and you will have no ability to say how it is used. Because you specifically asked for alternatives to a 529 education account I will not address that option.

Massachusetts just adopted the Massachusetts Uniform Trust Code, which generally makes it very easy to create a trust. A trust need not be complicated or expensive to be effective. To obtain asset protection the trust should be irrevocable.

If your father is in a position to make a $13,000 gift I wonder if he is intending to gift other assets in the future or leave her assets at death? What would be ideal is for your father to establish a trust, name you as trustee, put this gift and any future gifts for her in this trust. You could then protect these assets from your creditors, and avoid both estate and possibly income taxes on the investments made on her behalf. Because this trust old last for your dughter's entire lifetime, you could retain control until she is mature enough to assume this responibility. the trust assets would be protected from her creditors and protected from her spouse should she suffer a future divorce.

Speaking to a parent about money is rearely easy, but If you keep the focus on the advantages to his grandchild your father may be receptive to this conversation, and should be impressed with your thoughtfulness.

Legal Disclaimer: The comment provided above is intended as general information and is NOT legal advice. You should consult an attorney for advice regarding your individual situation. If your question concerns Estate Planning, Business Planning, Asset Protection, Elder Law, Long Term Care Planning, or matters governed by the laws of Massachusetts or Connecticut, you may contact me for a consultation at kquinn@legacycounsellors.com or 413-527-0517.

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