‘I just don’t trust my sister’: How do I donate money to my nieces without their mother having access to it?

‘I just don’t trust my sister’: How do I donate money to my nieces without their mother having access to it?

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter. Aunt Dear Aunt,

For now, I worry if I open a bank account for them and tell them about the money sitting there, my sister will wonder why I don’t just let her put the money into the account she controls for them. It will actually cause a fight, which is something I spend a lot of time trying to avoid. I am wondering if there is a way I can gift them money now and over the next few years, but not have my sister controlling the money. I’m happy with the idea that the money will be unavailable to them until they are 18 or ready to open a bank account of their own. 

My question: Is there a way to gift money to children that protects it from their parents without it seeming like I’m overtly protecting it from their parents? But I’m worried about their mother having control over the money. I just don’t trust my sister. She has a history of spending recklessly. I’m also concerned that if we fight again, she might tell them, when they are ready to take over their finances, that the money came from her or someone else. 

“Control: An adult must be appointed to act as the custodian (which could be you). The custodian has the ability to invest and withdraw funds for the benefit of the child.  Flexibility: You manage the investments until the age of maturity is reached by the child (usually 18 or 21).  At this time, they receive full control of the account.  Amy Richardson, CFP with Schwab Intelligent Portfolios Premium, says custodial accounts, opened under the Uniform Transfer to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA), are common vehicles for this purpose. They offer a host of benefits, some of which Richardson outlines below:

I understand that you want the money to reach the beneficiaries when they turn 18, and have it not ruffle any feathers in the meantime. First, some unsolicited advice: Don’t expect anything in return from your sister in terms of good behavior or better relations, assuming it takes two to make or break a relationship.  You’re doing a nice thing.

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