College fund from the in-laws

[bostonimproper]

MIL came into some inheritance money and feels the hole burning in her pocket, eager to give it away. My husband and I have suggested that she put the money into a college fund for our future children.

MA gives up to $2K state income tax deductions per year per couple for 529 with some low-ish fee funds from Fidelity. Tactically speaking I'm considering husband&I and MIL&FIL give $4K/year into two evenly funded 529 (one for each kid). Then any additional money she wants to give can go into a brokerage account under her name set aside for this special purpose. I'm thinking it might not be worthwhile to put too much into a 529 since who knows what the future of higher education will look like and it may not be worth the 10% fees if the money goes toward some other purpose (a business, a house, etc.).

Thoughts on this plan? Wwyd?

[ertyu]

I would make sure that her will is in order and that the brokerage account is specifically designated to be inherited by your kids.

[Hristo Botev]

This plan makes sense to me. My state has a similar tax deduction scheme for its 529 plan, and so DW and I put aside the max per year to the 529 to get the deduction, and no more, for the same reason--I have no idea what college is even going to look like by the time my kids are ready, but I don't for a second believe the future-looking college cost calculators the 529 plans provide. Perhaps leave the language of the brokerage account and/or trust purpose should be relatively vague, to make sure it'd cover your kid(s) going to trade school, etc., or some less traditional education/training that isn't just college tuition.

[Peanut]

Your plan seems like a smart and good one, although it's not one I would make myself. Both our in-laws have opened 529s or similar for our kids, but that was all their decision. One side had done it for other grandkids already; the other side followed the example of the former one. I don't have a real clear reason for not doing one ourselves. Maybe I'm resistant because it's so widely touted as a wise choice that it makes me skeptical. Or I would lose some control over the investment? I do think doing the minimum to get the maximum benefit is better than maxing out due to general inability to predict the future. I would also find doing one before I had kids to be a source of stress like inviting the universe to knock me down, but that is more of a personality quirk or perhaps flaw. I think you said you have a will that takes care of your future children while I still haven't gotten around to doing one for my kids (even though the lawyer advised one immediately), so our planning philosophies are clearly pretty different!

[bostonimproper]

Hm, I had been considering the brokerage account would be under our names but she'd pass the cash to us to put in. That way we could change any estate planning (which is expensive). In general estate is expected to be split 50/50 between husband and his sister, and she's getting a similar amount as we are now to pay off some debt.

@Peanut: I joke sometimes that I have a negative discount rate: future anxieties sting a lot more than present ones. Erego the planning, ha.

[JackMoore1965]

split 50/50 between husband and his sister it's a normal practice, and evryting ok with it!