I inherited a small amount of money and want to invest some of it for my only grandchild. She is 3. What other than the 529 plans do you recommend? I wanted to invest in Blue Chip stocks and reinvest the dividends. I also need to know if can set this up in my granddaughter’s name and SSN. I don’t want to deal with filing taxes each year for the gains. Is there anything out there for this kind of investment? Thank you for any help.
Terry Says: Don’t do that! Money invested in achild’s name weighs seven times more heavily against the family in the financial aid formula. And it will involve filing a tax return for the child or adding her dividend income to the parents’ return, depending on the amount of income. An account cannot be opened in the name of the child alone. It would have to be opened in an UGMA account (uniform gifts to minors act) — and either you or the parent would have to be the trustee.
Really, you’re much better off opening a 529 account, where the money will grow tax-free for college expenses! Take advantage of this wonderful opportunity. Go to www.SavingforCollege.com to learn more.