What do I do about only having a big college fund for one niece and not the other?

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Right after my sister had her first child I set up a college fund for her. A year later my sister had another daughter. During this time things were kind of a blur because of a combination of drugs and mental illness. So my 2nd nieces birth wasn’t big on my radar. Especially since I was sort of distant with my family during that time and had kept myself rather isolated.

It’s been a long time since this happened so things are a lot better now. Because of a lot of my personal issues though I have been bad about keeping track of my finances for many year. Recently I have finally started to getting it all in order and reconcile my accounts. While doing this I was reminded about my nieces school account.

The account had been set up to take out increments from my regular checking account regularly so that along with interest has added up to around $21,000. Which is a crazy amount. Im sure my 1st niece will be happy to hear about the money, but I also realized that I had never actually set up a second account for my 2nd niece. With how bad things were with me back then I just must have forgotten about it.

2nd niece is going to be going to college next year and will probably need money more as she didn’t get any large scholarships like 1st niece did.

I tried looking into the details of the account to see if I could maybe just split the money in half and put it into two separate accounts for each of them. The problem is that now that my 1st niece is an adult I legally have no control over the money and I can get in trouble for not giving her the money.

Another issue is that both my nieces do not like each other. They can be downright antagonistic towards each other and are extremely competitive about petty things. Being realistic 1st niece would never be willing to split the money with her sister or even keep it a secret.

Once they find out about the money for 1st niece I expect that 2nd niece, her parents, and the rest of our family would probably expect me to give her an equal amount of money out of my own pocket so as not to show favoritism.

But $27,000 is really a lot of money to give as a gift. Technically I could pull the same amount of money together if I sold some of my extracurricular vehicles. I’ve spent a lot on them over the years and I know it makes my family think I spend my money frivolously so they’ll probably expect me to sell some of them to be fair. I really don’t want to part with any of them though. I have a personal attachment to these things because I think all the time I spent working on them really helped me work through my issues in the past. Is it wrong that I don’t want to sell the things I love to fund my nieces college. Somehow I don’t think my family will get it.

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@jfleece,

Well, that is a bit of a dilemma. Family issues and money issues. I don't think you're obligated to fund anyone's education and it was a lovely gesture you did for your eldest niece. I really don't know what to suggest because I don't know how close you are to your family (whether their anger will upset you) - your nieces, in particular.

You are not responsible for their education costs. The fact that she didn't get any scholarships is not your concern, either. Have her parents bothered to save for her?

I hope Linkat trots in here soon as she seems to be the most familiar with college costs and options (loans, grants, etc).

Good luck.

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@jfleece,

Quote:

I tried looking into the details of the account to see if I could maybe just split the money in half and put it into two separate accounts for each of them. The problem is that now that my 1st niece is an adult I legally have no control over the money and I can get in trouble for not giving her the money.

Are you sure on this? How is the account set up? Usually a college fund is set up where either the parent or some other adult's name is on it for the benefit of a certain child (not sure of the exact legal name). That is how my daughters' accounts are set up. So they never actually touch it - when I pay for college I take a withdrawal from their account and use that to pay for it. I also can transfer one account into the other child's account. They are both over 18. But mine is a 529 and it is supposed to strictly be used for college expenses.

Is the account set up to pay for college? If this other niece is no longer in college then what would it benefit her any way?

It is honestly hard to know unless I know what sort of plan or account you have. To be honest I am not familiar with other college plans.

Other than that I am not sure what you can do - I agree that you should be in no legal obligation to provide either child money for college or have to take the heat from any family members as a result.

Could you reach out to the parents and explain what occurred? Maybe the parents are in a position to mediate this and spread the wealth between the two.

My last thought is if none of this will work - can you keep this hidden? I am guessing you no longer are providing any money in the account. You could stop that one and start a new one for your other niece and slowly accumulate money in it for her. When they are about equal in value - you could then give it as a gift say - when they get married or buy a house or have a child.

I would not sell your things - they are yours - the parents should be paying for their children's college --- it was a very kind but unnecessary thing you did.

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@Linkat,

It’s a custodial account with Schwab. I already looked into it and talked to a Schwab representative. They said that this type of account that all the assets are in her name and they are irrevocable. The account has to be turned over when she reaches the age of majority (which is 18 here). She’s 19 so technically I’m late giving it to her. That’s a whole other issue, but I don’t think she will make a big beef about it.

It’s not strictly a college account, but my older niece is still in college.

I can talk to my sister up front about it and give her a heads up, but she never saved up money for them.. The girl’s dad is not involved either.

Since I have to give my older niece the money right away I don’t see anyway of keeping it hidden.

I’m not so sure I’ll be able to save up as much for her. The main reason I have been looking into my finances is because my girlfriend is pregnant so I’ve already reallocated the money that was going into my nieces account towards savings and expenses for the baby. I don’t really have much else to work with.

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@jfleece,

Quote:

It’s a custodial account with Schwab

Yeah unfortunately there is nothing you can do - curious if she got any financial aid beyond scholarships - because seeing the type of account she had - she was supposed to declare that on her FASFA - that money was then in her name at majority and the expectation is that she would use pretty much 100% of that which would lower her financial aid need amount. That is why it is suggested you put money in something like a 529 account instead then that money is considered as the ownership of whoever is the "custodian" on that account as they have control. Say for instance it is usually a parent so a significant lesser amount of it is considered for financial aid - yeah it is weird but why financial planners can be an important person to utilize.

Sorry for that bit of education - just I have been through all this with my kids and work in the financial industry.

On an aside - how close are you with this niece that is not getting this financial benefit? Maybe there is nothing else you can do for her - something more personal. If she lives at college send her care packages, spend more time with her - take her out somewhere she really likes.

Some kids get it - and will not hold it against you. They will appreciate this time over money.

And if they don't get it, then they probably are not worth giving the money or attention to -

Yeah you have more to deal with personally - your nieces are now young adults - they should be caring for themselves any way.

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@jfleece,

That is a nasty predicament. I think your only real option is to tell everyone the truth. Your younger niece is not in any way hurt by not receiving money that was never there and she had no knowledge about although I can see the reaction you anticipate. If her parents push on you to give an equal amount to the younger niece, I would push back and say the nieces should share and they should figure it out as a family. In an ideal world, your older niece would share the money with her sister without a second thought.

About the account, it is not your responsibility to notify your niece about her money. It is your broker's responsibility to handle this as they are holding funds in her name. I did this with my two oldest before 529's came about. On their 18th birthdays, all correspondence started going to them. Of course, it is likely still coming to your home since your broker doesn't know her address, but you are not legally on the hook for not telling your niece about this money. You should send the broker her address and let her start getting her statements.

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@jfleece,

You take half of that money invest in stocks, crypto, or somebodies business and present half when the babe turns 30. I say 30 because by then the babe would probably burnt time in college, and or save it for when she is busted in the middle of the road and needs a leg-up.

It takes awhile before most people knows what to do with cash at all.

1 Reply

@PoliteMight,

I can’t legally touch that money anymore.

1 Reply

@jfleece,

So what have you decided? Don't leave us hanging!

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@Mame,

Well, I decided to at least give my sister a heads up about it before I told my older niece about her money. It pretty much all went to **** though like I expected. Before I had a chance to tell my older niece about the money my sister got the majority of the family to gang up on her to share the money with her sister. So now my older niece is going no contact with everyone and everyone was blaming me for breaking up the family by favoring my older niece and were demanding I give my younger niece the same amount of money to be fair.

Once they found out me and my partner are expecting a baby though a lot of them changed sides since according to them I have my own family to worry about now. Funnily enough one of my aunts actually came over to visit the other day and ended up giving us some money as an early baby shower gift/apology. Apparently she had originally planned on giving younger niece as a graduation gift, but she thought that she was being bratty so she wanted us to have it instead.

There’s still more than a few family members that I think I should sell my vehicles and give my niece the money since she needs it for school now and the baby won’t for a long time. They say that the family can easily help me out with childcare and handmedowns, but helping younger niece with money is harder because everyone is broke (other than aunt who gave me money). Furthermore they don’t think a parent should even have vehicles like the ones I have as they are luxuries and dangerous. So in their mind I was already in the wrong for not selling them as soon as I found out about the baby. My sister and my younger niece are by far the most pissed off at me and are continuing to badmouth me to everyone and want me banned from future family events until I make it right.

So the family is overall divided, but I’m going to try not to worry about it so much.

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@jfleece,

Sell your vehicles and give the money away? If most of the family wants to distance themselves from you, that doesn't really sound like a bad thing.

Just think, if you hadn't set up a fund for anyone, they could all be happy.

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@jfleece,

I guess no good deed goes unpunished. I think trying not to worry about it too much is a good policy. You are in no way in the wrong here. You can give your money to who you want. Honestly, your sister is a piece of work. She could have handled it quietly. For that matter, she could have told your younger niece nothing. Best of luck to you. If there is an interesting development, let us know.

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What do I do about only having a big college fund for one niece and not the other?

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