Grandparents using SSN

[taylorjm]

What is the name of your state? MI

My wife and I have a 5 year old daughter. When my daughter was born, we opened an investment account with a local Edward Jones investment house, and great grandma gave her some stocks to put in the account. My wife and I control this account until our daughter is 18. We recently found out by accident, that my wife's parents (grandparents) took my daughters SSN and opened another Edward Jones investment account in my daughters name, and put grandpa down as custodian for the account. We, as parents, are not listed on the account, and have no access to this account, even though its in our daughters name. We have no idea whats in it, and really don't care because we don't want contact with the grandparents anyway. We are furious about them going and opening a bank account in our daughters name without our permission, but the investment house says its perfectly fine. Isn't this a form of identity theft? Wouldn't parents have access to anything in their daughters name until she's 18? I'd be happy with just closing the account if I could.

 

[nextwife]

So the child's grandparents opened an investment account, as custodians, for the benefit of your daughter, and you're peeved??????? 'Splain please. "They" are NOT using her SS#, they are investing for her benefit, based upon your post.

THis is money they are investing FOR her- you do not have to be on the account. It will be daughter's money someday- not yours. This sort of account REQUIRES the child's own SS number.

 

[taylorjm]

No contact

The problem is that they have for years tried to control our family, and decide what we can/cannot do, especially when it comes to raising our child. This is just another way for them to rub it in our face that they control something. They also feel they know everything about how to manage money, and we know nothing, even though my wife is a CPA !!

We have cut off ties with them because of several issues, including trying to sabotage our marriage and split us up, therefore we want no contact with them, or anything from them.

So the child's grandparents opened an investment account, as custodians, for the benefit of your daughter, and you're peeved??????? 'Splain please. "They" are NOT using her SS#, they are investing for her benefit, based upon your post.

THis is money they are investing FOR her- you do not have to be on the account. It will be daughter's money someday- not yours. This sort of account REQUIRES the child's own SS number.

 

[nextwife]

You don't NEED to have anything to do with the account. It will be there, and someday it will benefit your daughter. Their future gift, they have a right to control it. End of story.

 

[LdiJ]

So the child's grandparents opened an investment account, as custodians, for the benefit of your daughter, and you're peeved??????? 'Splain please. "They" are NOT using her SS#, they are investing for her benefit, based upon your post.

THis is money they are investing FOR her- you do not have to be on the account. It will be daughter's money someday- not yours. This sort of account REQUIRES the child's own SS number.

Actually, there really could be a problem here....and it really could be somewhat of a form of identity theft. This parent's concern is not invalid.

If the custodial account shows the SS number of the custodian as primary, then its not a problem at all. However, if the custodial account shows the SS number of the child as primary, or even shows only the child's SS number, it can raise some pretty significant tax issues.

The custodian would have total access to the funds, but the tax liabilty would be on the child, and therefore the child's parents, should the custodian decide to cash in the stocks for their own use (which they legally could do) or even to make well meaning trades. The child or the child's parents would not have access to the funds to pay the tax liability, which could be significant.

Even when everyone's heart is totally in the right place, a brokerage account with a child's SS number as primary, or the only number listed, it can be quite problematic tax wise. If anyone's heart is NOT is the right place, it can be a real mess....and an expensive one for either the parents or the child.

I have a client who is a young adult, who discovered at age 19 that she had a HUGE unpaid tax liability to the IRS...spanning many years, because her own PARENTS used a custodial brokerage account, with her SS number as primary, to avoid taxes. All stock sales got reported in her name and number, yet she never saw the money nor had any access to it, and it was all gone by the time she turned 19.

She was eventually able to resolve it with the IRS, and turn the responsibility back on her parents, but it was a complicated endeavor that might not have succeeded if her parents hadn't already been in trouble for OTHER tax evasion.