Dear Quentin
Our family is a mess. Unfortunately, it’s typical mother-in-law drama. We worked for years and were dismissed for being outlaws rather than in-laws. Our son recently suggested we set up a college trust fund for his son. I replied and waffled. But I have good reason to hesitate.
When we were talking on the phone and asked their 5-year-old daughter to be quiet because they were “talking to Nana,” the boy asked, “Who is Nana?” He pops up. They replied, “She is my father’s mother and your grandmother.” Obviously we don’t get to see each other as often as I’d like, but these calls always end the same way.
“No,” said the girl angrily. mine Grandpa! It’s Eleanor. mine Grandpa!” (her maternal grandmother) and let the statement go uncorrected. As the expert in the room, I say nothing – as a general principle it is unwise to correct the behavior of other people’s children. Any thoughts on this?
Should I set up a college trust fund for a kid who doesn’t even know who I am?
Grandfather
Dear Grandpa,
You can’t hold a 5-year-old responsible for what she says to her parents, knowing or unknowingly how she feels on the other end of the line. Her world is very small, and if she doesn’t see you and connect with you, the adults in the room are to blame for that – both rooms. They include you, her son and daughter-in-law.
Perhaps your daughter-in-law is not easy to deal with, and she may feel the same way about you, but very sensitive parents can often correct their past mistakes by becoming engaged grandparents. That requires birthday cards and visits. And, once again, both parents and grandparents have a responsibility to do that.
The beauty of the grandparent/grandchild relationship can exist independently of the relationship with the parents, if all parties agree to put the children first. If your child wants you to set up a 529 plan, it’s a good idea to tell them that you shouldn’t be a helicopter grandparent if you’re contributing to your grandchild’s college education.
“‘If you’re contributing to your child’s college education, it makes sense not to be a helicopter grandparent.’“
As my colleague Alessandra Malito points out, grandparents are good candidates for setting up 529 plans for their grandchildren’s tax benefits. “When Grandma and Grandpa set up a 529 plan, which is a government-sponsored college education account, the assets don’t count against the child when they fill out their financial aid application,” she wrote.
“These accounts are tax-deductible in many states, making them an ideal option for someone who wants to benefit grandparents at tax time and leave a legacy with a specific purpose,” Malito added. There are two types: Tuition Today’s prepaid plans for certain colleges, and flexible savings plans for tuition, accommodation, and sometimes textbooks.
To give you an idea of how popular they are and the financial commitment: More than $434 billion in assets were invested in 529 education savings accounts last year, a 10 percent increase over the previous year. The average account size was $30,287. The withdrawals are tax-free if they are used for approved educational purposes.
If you can afford it, set up a 529 plan. It is bread on water for your family. Seeing your grandchild off to college should be “reward” enough.
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