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Barrister
Barrister, Attorney
Category: Estate Law
Satisfied Customers: 36240
Experience:  16 yrs estate law, real estate. Wills/Trusts/Probate
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My kids' grandfather set up college savings accounts in each

Customer Question

My kids' grandfather set up college savings accounts in each of their names, as well as trust accounts. When he does, he named their father (my ex) as the trustee. Their father has had very contentious relationships with all the kids and he uses the money as a threat when they get in arguments with him. He followed through with his threat and withheld the money from my oldest daughter last year so that she cannot go to college. He is now doing the same threats to my son. Their father claims the money is his because it's in his name. Is this legal??
Submitted: 8 months ago.
Category: Estate Law
Expert:  Barrister replied 8 months ago.

Hello and welcome! My name is ***** ***** I am a licensed attorney who will try my very best to help with your situation or get you to someone who can. There may be a slight delay in my responses as I research statutes or ordinances and type out an answer or reply, but rest assured, I am working on your question.

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Are the children still minors or are they over 18?

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Do you know what the terms of the college savings accounts are with regard to when they disburse funds?

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And the trust accounts are in the children's names with ex listed as trustee, correct?

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Have you or any of the children talked to an attorney?

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thanks

Barrister

Customer: replied 8 months ago.
My oldest is 20. The one he is threatening now will be 18 in March. My youngest is 13.
There are/were 2 accounts per child on the divorce decree. On the decree, Ex is listed as the sole and exclusive control. The school accounts are Morgan stanely Scholars Choice accounts. I do know the terms. It does not say trustee after these accounts, and each has its own account number so I am assuming each child has their name on these accounts. There are then 3 Morgan Stanley family trust accounts, again each has their own account and he's listed as the trustee. He told me he "dissolved" all of my oldest's accounts.
Customer: replied 8 months ago.
I do NOT know the terms. I just noticed that typo-sorry!!
Expert:  Barrister replied 8 months ago.

Ok, with a normal custodial account like a college savings plan, the parent remains in control of it until the minor turns 18 at which time the beneficiary can demand that the custodial account be terminated and that they receive the money. So any child over 18 should contact the bank where the account is held and see what they need to file with the bank to terminate the account.

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As for the trust accounts, those are a little different because with a trust, they can go on indefinitely, or have some "triggering event" that terminates them. So if ex is the trustee, then the children have a legal right once they are 18 to request a copy of the trust contract to review it and see what it says about when the trust terminates and disburses.

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My guess is that the college accounts are supposed to terminate when the child turns 18, but the trust accounts may continue after that giving the trustee discretion to make disbursements up until the child turns a certain age, normally 21 or 25 or 30 after which they end and the money in the account goes to the child.

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So this is going to require some investigation by the child with Morgan Stanley to find out what the terms of the accounts are and when they are supposed to terminate. However that information should be readily available from Morgan Stanley.

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thanks

Barrister

Customer: replied 8 months ago.
Thank you. So is he legally able to dissolve these and keep the money for himself as he claimed he did with my daughter? Are there possible loop holes that would make that possible (if there were he'd find them).
Expert:  Barrister replied 8 months ago.

If the college accounts were set up by grandfather for the kids, then no, he has no legal right to take that money because it was a gift in trust to the children from grandfather.

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As for the trust accounts, he would only have that power if the trust specifically granted it to him in the trust documents. That is why they need to get a copy of the paperwork and review it. But generally again, no, as the trust is set up initially for each specific child's benefit and the funds don't belong to the trustee.

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I kind of suspect that he might be lying about dissolving and taking the money because as a general rule that wouldn't be allowed as it would legally be considered theft since he doesn't own the money and the accounts weren't set up for his benefit. He is simply the "gatekeeper" until the children become legal adults.

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thanks

Barrister

Customer: replied 8 months ago.
One more question. My daughter tried to call Morgan Stanley, but the divorce decree only has part of the account number on it. They will not access the trust without the full account number and/or her dad's and grandpa's ss# (she has her dad's but not grandpa's). Is there a way to find the account number? Or to find a social security of a deceased person?
Expert:  Barrister replied 8 months ago.

About the only way to get that information if the bank won't provide it would be from father by sending him a certified letter requesting it. As the trustee, he has a legal duty to respond to requests for information about the trust from beneficiaries. if he refused, then any air could file a lawsuit against any air could file a lawsuit against him in Probate Court and claim he has breached his fiduciary duty to them by refusing to provide information about the trust and any assets in it. Under the model Trust Code a trustee has a a trustee has a legal duty to provide an accounting to the trustee at least once a year.

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Thanks

Barrister

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