In the intervening years, it's up to parents to teach their kids how to handle money responsibly so this kind of incident doesn't happen. Even in the best of circumstances, however, parents should think twice about giving out ATM cards and PIN numbers, especially if there's any question about a child's maturity or trustworthiness. Frankly, though, if your daughter raided your account and ran away, you have bigger worries than responsible money management. So, for example, your children must be the beneficiaries of the college-savings plan, says John McCabe, legal counsel for the National Conference of Commissioners on Uniform State Laws. If your kids chose not to use the money for college, they'd have to pay the penalty.
Taxes can be tricky, too.
If the assets are currently invested in stocks or mutual funds, you'd have to sell the shares to get cash to invest in a college-savings plan. In the end, it might be simpler to keep the custodial money where it is and start the college-savings plan with new contributions. Dr. Tightwad can't reply to each question, but she will answer questions of general interest. The Kiplinger Washington Editors, Inc.