Upon reading this pit thread, I learned that it’s not unusual for parent’s to take money from their children–money that was given to or earned by the children. I don’t usually give money as a gift, so this isn’t really an issue for me, but I’m just curious about this matter.
If a minor has money, do the parents have a legal right to it? I’m assuming that if it’s in a joint account, there’s not much the kid can do about it if the parents decide to use grandma’s college money to go on a cruise. What if the account is just in the minor’s name? Can minors even get accounts just in their name? I really have no idea how this works. If I wanted to give a minor a massive sum of money (which I don’t have, so hypothetically,) how could I keep the parents’ paws off? Is this what trusts are for?
Please feel free to take this thread on any relevant tangents, since I’m not even sure if I’m asking the right questions.
California’s Coogan Law (named for child star–and later Uncle Fester–Jackie Coogan) requires among other conditions that 15% of the money a child earns for working in the entertainment industry be set aside in an untouchable trust account. Other states may have similar requirements.
Minors can’t have accounts in their own name. An adult has to be on the account (it doesnt’ have to be their paretns). The best solution would be instead of giving monery directly to the minor to put it in a trust fund that they can access when they turn 18 (or 21, 25, etc). When my grandmother died she left more money to me and my brother than her other grandkids. I was 16 he was 29 we both got our money directly. My cousins had trust funds with my brother as trustee. My uncle and aunt tried to get my cousin’s money to buy a house. He refused, and they’re no longer on speaking terms, but the cousin will have a couple grand for college.
I was left some money in trust when my grandpa died. The trust was structured so that you would get the money in three payouts- you got a chunk at age 25, age 30 and age 35. It was a formula that had served the family well when HIS father died, so he set his up that way as well (for the grandchildren’s part, not the children). My dad has structured the trusts for my kids the same way.
It was done that way to give you three chances to do something with the money, and to avoid having you blow it all at once and be left with nothing.
Twins in my dad’s generation tried very hard to break the trust (desperately trying to blow it all at once!) and were unsuccessful.
As I was 30 when he died, I got 2/3 at once. My brother was only 27, so he got 1/3. My cousin got 2/3 as well, he’s 1 year older than me. It worked out really well- we paid off a bunch of debt and bought our first house with the first chunk, and then three years ago we used the last 1/3 to get a new house and pay off a car.
Our family tends to use the following formula when dying and leaving stuff behind- 70% to the children, and 30% to the grandchildren.
Not necessarily- it depends on the bank’s policy. My 20 year old nephew had a savings account in his name only before he was 18- but the bank wouldn’t issue an ATM/debit card until he was 18.
I had a savings account when I was under 18. In my own name and not a joint account with anyone. It will depend on the state, of course, but usually banks are happy to set up savings accounts for anyone. It’s not like they’re going to be hurt by them.
You can. You could also set up an ordinary account, naming the child as the beneficiary of it if you die. However, I don’t know if you’re able to put an age restriction on it. If it went to the child when they were a minor, I believe the parents would be put in charge of it.