[meg-momto2]

my dad and his wife opened a college fund for my son when he was born. he didn't tell me he was closing them. in the letter he sent with the checks he said they were losing value and wanted me to do whatever i wanted with them. i have two checks made out for $450 total in my dads name and my sons name. he signed them over to me on the back. i took them to a CU and bank and neither would let me deposit them. the second bank said the issuing bank would return the money unless i set up another college fund up because it's made out "FBO" next to my sons name. i'd like to put them in a regular saving with our CU for now. i'm completely clueless about this stuff and don't know what to do. i thought about calling the issuing bank and seeing if they would return the money if it wasn't put into a certain type of account. does anyone have experience with this kind of situation?

 

[angelcollector1]

I'm going to guess that your son is 5? If he can write his name, I would say have him write, or print his name on the back of the checks, deposit them into your account and then once they clear, take the $ out and open an account in his name with your name as well, since an adult's name as to be on an account in trust for a child.

 

[Smithie]

Good grief. Of COURSE the college fund lost money! The entire economy sucks right now! It's amazing the choices that otherwise rational people are making these days...

I would investigate opening up a 529 plan for your son. I have been very happy with New York's plan: www.nysaves.org The fee structure is among the best in the nation.

Your dad and his wife could contribute to this plan in the future if they desire, without going through you, and obviously you can contribute right along as you are able. In fact, any person could send a contribution in to this plan (they just changed the rules on that one). It doesn't have to be a relative.

 

[meg-momto2]

thanks ladies. i'm not completely opposed to putting into another college fund. i just don't want to do it until i have time to research it more. i guess my main problem is no one will let me deposit/cash them. our CU is in another state and the shared branch in town wouldn't deposit it. my other bank was the one who told me i need to open an investment account with them to deposit it. i think they were just trying to get more business. i wish my dad had just let it be. we've got 12 years before it would have been touched.

 

[angelcollector1]

The branch might have said you couldn't deposit them but you could deposit them through the ATM if you have a card, and let them go through that way unless they are not regular checks that are cashable in a bank. I think the branch teller was just being obstinant..

 

[1growingsprout]

The teller was correct. The checks are made out FBO which is FOR THE BENEFIT of... The account the checks are deposited into would need to have the FBO's name on it (your sons) or your fathers.

Also if the funds came from an educational account there could be a tax liability for early withdrawl, if the funds are not used for an educational purpose.

 

[meg-momto2]

thanks 1growingsprout. that's what i need to know. i'll see if they can let me open a savings account in his name. now, would i have to deal with the tax liability? i would think my dad would since it was in his name and he closed it.

 

[1growingsprout]

Quote:

Originally Posted by meg-momto2 thanks 1growingsprout. that's what i need to know. i'll see if they can let me open a savings account in his name. now, would i have to deal with the tax liability? i would think my dad would since it was in his name and he closed it.

I *think* the adult on the account is responsible for the tax issues. So that would be your father. If he recently closed the account (2009) he will get a tax statement for next years taxes, and while there may not be any capital gains to pay there is definately the early withdrawl fee. (You may want to call the firm that held the original account just to be sure)

As for your current bank if you talk to the 'new accounts' person at the local branch they should be able to help you open some type of account that you can deposit the checks into. Keep inmind you may not be able to make an immediate withdrawl and if you open another educational account that could avoid tax issues.

PM me if you want more details.