snowscreamer

I have some money given by a relative to invest for my daughter. She is a US citizen; the rest of the family are British citizens. We intend to return to the UK in the next few years. I can't invest in the UK as most institutions won't touch US citizens and/or residents with a barge pole and besides as US residents tax-advantaged accounts are unavailable. If we were staying in the US then a 529 account would be perfect however we assume our daughter will end up going to university in the UK... so it wouldn't be a qualified expense. Any clues?
Anyone know anything about UGMAs? Would that be suitable? Would our return to the UK complicate matters?

PetrifiedExPat

We avoided a 529 simply because it is too restrictive. In the end punted for an ETF with bonds (80:20), shoved in 100k and let it grow for 18 years. After that, can disperse as and when. Car, home, college......

We try and put in ~8000 a year to keep it going.

I know nothing about UGMAs, will be interested to know others thoughts.

snowscreamer

Was that just a regular brokerage account, in your own name? An UGMA seems to a brokerage account in the child's name from what I've been able to surmise so far. My main worry is how to transfer it back to the UK, either when we return or when my daughter turns 18, without serious penalty.

PetrifiedExPat

Yes in our own name, fully expecting that isn't the most efficient tax wise, but after a lot of thought and consultation, punted for it. Given it's projected value I didn't want it to drop in the hands of an 18 year old in one go, to be honest with you.

tom169

It looks like a 529 can be used at quite a few British universities.

I have a 529 for my son which I fund monthly, and also an UTMA.

The UTMA received a seed amount of $1500 at birth (which given compound interest should reach over $1mm by his retirement) and will be where I put some monetary gifts he will no doubt receive through birthdays/Christmas. I hope to be able to teach him about investing, selecting funds, etc.

penguinsix

I think a 529 can be used at a number of British schools. There is a list published online.

I don't know the UK rules on financial aid awards, but in the US if the money is 'your daughters' then she is expected to spend XX% it at a US school (i.e. her financial aid reward could be lowered by the amount she is required to spend). As her parents, you are expected to spend YY% on her education as well. Many Americans put the money in the grandparent's name and then complete a transfer later in the school year (i.e. Junior or Senior year) to maximize the financial aid awards earlier. Lots of guidance on this online.

PetrifiedExPat

This has stimulated a follow on question. To simplify, if my daughters school charges 20k/year, can I just pay it myself directly? Would there be any tax implications there? (beyond withdrawing funds from an ETF)

tom169

I am not aware of any tax implications of paying cash for a kids college. As you mention liquidating an ETF from a brokerage account would be a taxable event.

penguinsix

I don't see any problem in paying cash, though many schools do offer a monthly payment plan so you only need to take out what you need when you need it and continue to get interest on part of your money as the year goes by.

mommapudding

We used a 529 for our daughter’s tuition in England. The transferring and reporting was the only inconvenience.