Parker’s stock shares have a new home
Parker’s stock shares have a new home
An important transfer puts Parker in a position of ownership.
Back in October, when I began transferring money I’d saved for Parker from a bank into the stock market, I didn’t consider long-term logistics.
In my ignorance, I hastily dumped Parker’s money into my brokerage account. Only weeks later did it occur to me Parker never would be the legal owner. Our government, with its rigid rules and regulations, would frown upon me trying to simply slide Parker what I hope will be an appreciable, six-figure asset as her high school graduation gift. I needed another way.
A little research, just a few clicks online, exposed me to custodial accounts. I was familiar with 529 plans for college savings. Parker has long had one established in her name. But I didn’t know of other vehicles for safely and smartly storing money for her future.
For much of the past five months, I fixated on how Parker’s money moved in the stock market. When I wasn’t watching the ticker, I eagerly anticipated dividend time, often calculating our next payouts. I knew our set-up wasn’t sustainable. It would need to be fixed. Parker had to have her name on her account.
I’m proud to say as of April 4, she does.
I transferred 69 shares (and counting!) of ticker symbol VYM from my brokerage to one owned by Parker but operated by me until she comes of age. I’m only the custodian of the account. Legally, all the funds now and forever belong to Parker. They must be used for her benefit.
The format is exactly what I sought. It falls under the Uniform Transfers to Minors Act (UTMA). I’m still learning the ins and outs. For example, it appears I won’t be passing the account to Parker as a high school graduation gift.
The age at which a minor can receive UTMA assets varies by state, but the state of Illinois says the age of majority is 21 (sorry, Parker). But I’m perfectly fine with a couple more years of compounding working for us. I want Parker to keep her compounding going uninterrupted for as long as possible after she assumes control.
One drawback to this custodial account is it can impact Parker’s eligibility for scholarships and financial aid. It’s OK. I’m pushing Parker to build a company long before having to sweat college and its exorbitant costs. Grow something so mighty they’ll want to put your name on a building even though you didn’t attend.
Other pros and cons exist and should be researched before making any decision. But my needs were more basic.
By switching Parker’s money from my brokerage to a custodial account, I saved myself from temptation. As long as Parker’s money still legally belonged to me, I knew I could access it and do with it what I saw fit. I didn’t touch it and never felt compelled. But times are good.
Where might my head be when the next major car repair is required? What if a medical emergency called for cash? Would I dip into Parker’s fund or figure out a different way?
This new home for Parker’s money takes the decision out of my hands. I’ve scheduled recurring deposits to be made each month and authorized Parker’s dividends to automatically reinvest. My savings method for Parker is starting to print money on autopilot. I don’t have to worry about anything.
Except for coming up with a new idea for Parker’s graduation gift.
Disclaimer: The information contained on Money Talks is not intended as, and should not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor. These are my personal experiences, and neither this website, newsletter nor podcast is a substitute for advice from a qualified professional.
I’m moving Brinley’s account over to a custodial account as well! 💰
I wanted to question you about the Gerber fund for her.. of course they want me to increase it! Is this worth the dollars I’m putting into it? Is there somewhere else I should be putting it??