Few options for reclaiming college funds from grandparents

Dear Liz: When my cousin and I were children more than 20 years ago, my grandparents opened a college savings account for each of us. I have no idea what kind of account this was, or where it was located. My grandfather passed away a few years later. While I was in high school, my grandmother informed me the investments had not done well, and she was closing the accounts. I received a check for $500 at high school graduation that was supposed to be the balance of the account. I assumed my cousin received the same, until she recently posted on a social networking site she was thankful her grandmother started a college fund when she was young that covered the entire cost of her education. I am furious at my grandmother, and now believe both accounts were cashed out and given to my cousin. Without knowing anything about the accounts, except that one was intended for me, is there any way to find out what actually happened to the money? And would I have legal recourse to try to recoup the money, since my grandfather intended it for me?

Answer: Your cousin has at least two grandmothers. Have you considered the possibility she wasn’t referring to the one you share?

If your cousin left no doubt in her post, there’s still not much you can do. If your grandparents opened custodial accounts, such as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts, then legally the money was yours and shouldn’t have been transferred to your cousin, if that’s in fact what happened. But your grandparents simply may have opened accounts in their own names that they informally earmarked for college educations. In that case, they could have done anything they wanted with the money.

Even if you had records proving the money was yours and it was wrongfully transferred, the idea of taking legal action against a family member should give you some pause. Since you have no such records, you’re pretty much at a dead end. You can ask your grandmother about this, or simply let the matter rest as one of the mysteries of family life and move on with your own.

Don’t pay bills of irresponsible relatives

Dear Liz: How does a family without any income qualify for assistance? My son-in-law has had an Internet business for a few years. He did OK for a while, but not lately. Because he owns his own business, he can’t get unemployment. We’re paying for everything and can’t do it much longer. My daughter has a special needs child and is a stay-at-home mom. The kids have medical insurance, but the parents don’t. What steps are available to them to get the help they so desperately need?

Answer: If your son-in-law incorporated his business and paid into his state’s unemployment fund, he may qualify for benefits. If not, he can start his search for help at Benefits.gov, a federal website with links to a variety of assistance programs.

That you’re helping the family financially is a blessing to them — but the fact that you’re “paying for everything” is a huge red flag. Families can fall upon tough times, but responsible ones have some savings they can tap and are diligent about finding ways to make money, even if it’s not as much as they were able to command in the past. If they can’t make ends meet, responsible families make changes — sometimes drastic changes — until they can.

What responsible families don’t do is continue relying on relatives until those relatives are bled dry. If your son-in-law isn’t actively looking for a job, he should be. If your daughter is the more employable one and can find work, then he could take over the child-care duties.

They may not take these steps if they think they can still count on you to pay the bills, so you need to be straight with them about your inability to continue supporting their family.

Add to 401(k) while paying down loan

Dear Liz: I have a 401(k) loan that I used to purchase a car. I plan on aggressively paying off the balance in two years or less. Should I continue making contributions to my 401(k) or should I stop and use the money I was contributing to pay the loan off faster?

Answer: Continue contributing to your 401(k), no matter what. You may save a few bucks in interest in the short run if you stop contributing to pay down the loan, but you’ll lose out on the much bigger compounded gains your contributions could have made over the coming decades.

Questions for possible inclusion in Liz Weston’s column may be sent to 3940 Laurel Canyon, No. 238, Studio City, CA 91604 or via https://www.asklizweston.com. Distributed by No More Red Inc.