Do you have to change a California Scholarshare 529 account after the death of an owner?

I ask this question and it’s personal to me… Do you have to change a California Scholarshare 529 account after the death of an owner?

Let’s talk through the mechanics of the situation and how it SHOULD operate first.

Let’s hypothetically say a grandma puts aside money for each of two grandchildren when they are young children. Let’s say she puts $10k in to each account though the dollar amount doesn’t matter. So grandma sets up an account with own her trust as the owner so The Grandma Living Trust as the “owner,” names Granddaughter as the beneficiary and names Daughter in Law as the “custodian.” Thus documentation always shows DIL along with grandma’s name. Although I would swear on my hypothetical mom’s hypothetical grave that she named DIL as the “contingent owner” which, if that were the case, the account certainly would transfer right over to DIL, right!? Since grandma is so much older there is a good chance that grandma will die before granddaughter has used all of her college money, correct? It also would seem that a custodian of an account has full control over the account because the word custodian sounds pretty broad to me. Lastly, and above all else, it makes no sense on earth that anything other than, at most, a death certificate from grandma would be required upon her death. Right? I mean if an elderly person sets something up for a much younger person they aren’t’ trying to create problems for anybody after they die. You with me so far?

Soooo, let’s say The California Scholarshare 529 organization, managed by Tiaa-Cref, doesn’t agree with the above analysis… apparently. Even more interesting, looking back at past communications, it seems the required forms were different for Granddaughter than for Grandson even though the accounts were set up the same way originally. Apparently because GD was 9 and GS was 10 they thus required different forms when G’ma died!? This makes no sense but welcome to the world of Scholarshare!

So the “custodian” on account can do nothing! Why are they named on the account then? What’s the purpose? I really don’t get that. Is it just to make the DIL feel good by seeing her name?

Now they want the successor trustee to fill out forms that includes original account information even though they had nothing to do with the account. I don’t have that info.

The whole thing, to use a technical term, is A CLUSTER F%$#!

California 529 Scholarshare, administered by Tiaa-Cref, should be embarrassed with their setup which makes no sense!

Having said all that I still like the 529 has an investment vehicle for kids that will likely go to college or trade school. I also like the concept of them being started as young as possible in the child’s life. Get that appreciation working!

The post Do you have to change a California Scholarshare 529 account after the death of an owner? appeared first on Probate Sacramento CA | Trusted Probate and Estate Attorney.