I have a coworker who’s child is the beneficiary on someone’s pension. Until the child turns 18, the coworker can do what they deem fit with the money. The coworker has decided without, I asked them, consulting their spouse and the child that they will use the money to send all of their children to college. The coworker has two other children. What do you think of this? Also, how would you feel if you were the child in question (now, as an adult)? I have mixed feelings and am interested to know what others think.
Also, how would you hand the money if you were the parent?
Money is fungible. Presumably, all the children would have been sent to college regardless. That the pension money is set aside for this means that there is more other money for other things.
I mean, flip it the other way: let’s say your coworker sent one kid on fancy vacations, bought him a car at 16, bought him better clothes than his siblings, gave him a more generous allowance so that it was clear that only he was benefiting from “his” money. Would that seem right?
You haven’t given us much information. Whose pension was it? Was the child in question say, the only grandchild at the time the beneficiary was decided? Should it have been amended to include the other children? Or did the person earning the pension intend for the one child to be the sole beneficiary at the expense of the others? Not fair, but that’s how it goes sometimes.
Is the child in question the oldest child? If so, he turns 18 and gets the money, then there’s no sending the other kids to school unless the kid decides to. In most cases where money is being held in trust for a minor what the trustee “deems fit” to do with the money generally has to directly benefit the child. I’m not sure sending siblings to college counts as a direct benefit to the child.
As a parent, I would have to look at the possible intent of the original pensioner and how the legal documents were written with regard to how I could use the money until the kid turns 18.
Older dad has one kid. Dad dies. Leaves kid with a survivor’s right to a pension of $X/month until the kid hits 18. Then no more money. Living parent remarries, has more kids.
The money isn’t really “for the benefit of the child” the way an inheritance is. This is money designated to go towards supporting of the child, which I think broadly includes anything toward the support of the household the child lives in. Presumably the widow’s new husband is contributing his income to the support of the household, which includes the child. They presumably don’t separate out his income and use it only for “his” kids. It’s all one pile of money, “household income”. Which income checks went into the sub-pile “college savings” is kind of moot.
Interesting. I wonder if it was the child’s Godparent. First and foremost, your co-worker needs to make sure he isn’t violating the terms of the trust agreement that make him the trustee over this money. I highly doubt that money left to one minor can be used to benefit all the children.
If this were the case in my family and I didn’t need the money to support the child day to day, I would put it in an account for him until he comes of age. Presumably he would use that money for college and I would have more money to spend on the other two kids since I would only be dividing my own money two ways instead of three.
Or if the pension was intended to be “compensatory”. Say, that eldest child would not have gone to college without it (it’s a girl and the parents would have considered sending the younger boys to college a priority), or it’s got some sort of disability. Since the parent is speaking about “sending the children to college”, it sounds as if the children themselves are not expected to contribute to their educations.
I’d be pretty pissed off if I was the wife, but that’s me and it wouldn’t be at the decision (which may be perfectly fair for all I know) but at his taking it without me; I know families where one of the spouses is “in charge of money” and the other one is perfectly happy to keep it that way. As a friend of my mother’s told his very-grown-up children when they told him he “had to” stop letting their mother handle all financial affairs, “she enjoys doing it, she wants to do it, she’s good at it, why should I get all worked up about it?”
So isn’t that denying the first kid his share of your money? Why should he get less of the patrimony just because he happens to have other funds? That seems unfair in exactly the same way as using the pension money to send all three kids to college and using the day to day household income to support all three kids.
I just can’t see the difference, ethically, between using this pile of money to send this one kid to college, and not letting the other two touch it, and this pile of money to send the other two kids to college–but not let the first kid touch it–and just using one big pile of money to send all three kids to college.
Now, it’s really weird that it’s not a parent. OP, are you sure it’s a pension, not some form of trust? I think it’s very unusual for a non-spouse, non-child to have survivor’s rights to a pension.
It’s a pension. I have one, too. My beneficiary, I’m unmarried and have no children, is an arts foundation. You can give it to corporations (schools and charities fall into this) or a person (related or nonrelated). However, it’s very hard to get the pension, because it is hard for a nonrelative to get the death certificate. It took my coworker 7 months. Before you retire, you can change it. I’m not to sure how it works after you retire.
I don't think it's so weird that it's not a parent. If I were single , I could list anyone I wanted to as the beneficiary on my pension. What seems weird to me is that the person would list one child as the beneficiary rather than all three, unless there was some specific reason - the person was related to only one child, that child had some sort of disability that would either require more money or affect the child's earning capacity , this child is the only girl and the parents will fund an education for the boys but not for her, etc. Something.
If this happened in my family, one kid would have a pile of cash on the 18th birthday. My college spending would be still be divided between all three kids , because they are all my kids. If I had one kid who saved all their cash and another who spent it all, I wouldn’t give the saver less money for college, and I don’t see this as being any different.
I see it as being different, because doesn’t the college take into account that the child in question has this money? Wouldn’t it appear when the colleges do like FASFA and other things. Basically, my point is child X may not be entitled to grants and other moneys because of this money, while the other two may because the money isn’t their’s and it’s not the parents. Considering the child is the eldest, to my knowledge it wouldn’t effect them when it’s their turn to go/pay for college.
Basically my point is, let’s say the parents couldn’t pay 10,000 for X’s education. This goes for siblings but they don’t have 10,000 in debt or any, because they got all sorts of grants due to not having this money in their name.
I know if I were X I would be annoyed if I found myself in such a situation. I.e. my siblings got free schooling/less debt when my parents were aware I wasn’t entilted to the same offers my siblings were.
Yes, but it wouldn’t matter whether the money came from someone’s pension or whether the kid worked through high school and saved all of their money. If I have $30,000 to spend on college, they each get $10,000. If I have $3000, they each get $1000. And yes, if one has $10,000 sitting in the bank they might get less grant money than the others - or none of them might get any grant money at all and the kid with money in the bank may be the only one to graduate without any debt . There’s not just one way the financial aid can play out - there are too many variables , and I’m not sure that the financial aid situation should have anything to do with my contribution as a parent.
I’m really not sure what you mean by this - do you mean you think the parents should contribute more for the kid who has the money because he or she might miss out on grants?
To the first part, I’m talking about debt. It’s not fair if the eldest child ends up in debt due to the penison, while the others walk away debt free because no only did they get money they got a pie of the pie so to speak. My example is the parents can cover all but 10,000 of the price of college for each child. It’s a nice even number. So, child X gets a nice 10,000 piece of debt while siblings don’t because they were able to get grants and aid based scholarships.
Yes, because I think they will be less likely to get grants and scholarships that partially need based. The eldest has money in their name. Where as the other two will have a better chance of these. So, my opinion is that the pension money should be soley towards that child’s college fund. If my coworker and spouse want to use their own money for the other children, they should.
I think you misunderstood me. I think the pension money should be solely for that child (that’s what I meant about one kid having a pile of cash on the 18th birthday), and it’s up to him or her to decide how he or she wants to spend it once the 18th birthday is reached. My contribution from my own funds would be the same for each child. Since I’d be putting all the pension money away for the beneficiary, he or she may have accumulated more than enough to pay for a college education depending on the size of the pension , how many years it was received , the college chosen etc. I would still give that child the same amount of money as I gave the other two, even if it wasn’t needed and it would leave that child with a nest egg.