How is a 529IP account owner able to access the account money, or is the beneficiary the only one able?
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How is a 529IP account owner able to access the account money, or is the beneficiary the only one able?
My daughter’s grandfather set up a 529IP account for her 14 years ago. Recently her father, who has money troubles, convinced his father to switch ownership to him. Now my ex-husband is the owner, my daughter the beneficiary. Can he access the money in the account? Can he restrict where she attends college? Can my fathe- in-law revoke this if he chooses?
Asked on April 25, 2011 under Estate Planning, Pennsylvania
Answers:
MD, Member, California Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If her grandfather is deemed incompetent at the time of the transfer, then you might be able to bring this to the plan administrator and see if the administrator will reverse the "ownership". If your father is of sound mind, then the only issue now is whether you can take over by bringing a motion in court to prove that due to his money issues, he may abuse the power and somehow compromise the account. A 529 plan is one type of plan many families use to save for college for their children. There are different types of 529 plans and so you need to check which one has been set up for your daughter and with which company. If a non qualified withdrawal is made (i.e., not for school), the father will be paying at his rate (as an owner) for taxes plus another 10% penalty.
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