Hey!!! i want to present a wonderful gift to my niece who turns 1 this
month. I have this abstract idea. i want to start a fund or deposit
kind of thing for her college. I can initially deposit some amount
into it and probably I can deposit an amount into it every year on her
B'day. which should be really helpful once she is ready to go to
college.

I need help on realizing this abstract idea. Does any bank or some other
firm offer any plans like these for little kids? Or, any ideas on how
I can or should go about it? I can deposit upto $500 to start with.

Any help is greatly appreciated and rewarded.

---

Request for Question Clarification by pinkfreud-ga on 02 Jul 2003 11:27 PDT

In seeking a bank plan like the one you mention, it would be very
helpful for Researchers to know your approximate location. In what
nation (and state or province) should we concentrate our efforts?

---

Clarification of Question by gova-ga on 02 Jul 2003 15:33 PDT

Portland, Oregon, United States.

Hi, Gova:

Since you are in the United States, any bank that is federally
insured, or any savings and loan institution likewise insured, or even
an insured credit union will allow you to open an account with you as
trustee for your niece.

Here's something my own children's grandparents did for each of them,
which I thought was a beautiful idea.

They opened a passbook savings plan on the day the child was born.
Thereafter, at certain "milestones" in their lives, they periodically
added to the savings accounts. The amounts were never 'huge', that is
$1, $2 or $5 here, perhaps $10 there, but for each milestone, some
amount, however large or small, was added.

The point of using the passbooks were that for each deposit which was
recorded in the passbook, there was a handwritten notation of the
occasion, such as "1st Birthday", "first tooth", "started
kindergarten", "Valentines Day", "graduation from 6th grade", etc.

The money was compounded, and by the time each graduated from high
school, there were several thousand dollars in the account, and
Grandma and Grandpa presented the passbooks (yes, plural, by that
time, there were several of them) to each of them when they graduated.

Besides having a nice amount to use to further their educations, the
passbooks were a reminder of special events in their lives as they
were growing up.

It was both a very touching and very useful gift upon the occasion of
their high school graduation.

Most banks in the Portland area, such as Liberty Bank, Bank of
America, etc., offer this service. Setting up the account as trustee
for your niece will enable you to control the account until a specific
instance in her life, such as attaining her majority, graduation from
highschool, whatever.

Should something happen to you and you die before that point, the
account is hers, and it would be turned over to her legal guardian.

I think your idea is lovely, and your niece is lucky to have you in
her life.

Regards,
Serenata

Dear Serenata,

Thanks a lot for your excellent answer. It is very informative. But,
since I keep moving from place to place, it would be difficult for me
to maintain the pass book and deposit into the account. So, instead I
went for the Saving Bonds. But, I can defintely use this idea of bank
trustee thing in future. Thanks for your reply.

Have you considered U.S. Savings Bonds? My kids have been receiving
"Series I" bonds from their grandmother since birth, and at the moment
have a very good return rate compared with CD's and savings accounts.
They can be issued in the child's name in a number of denominations,
and they just keep growing the longer they are held and not redeemed.

Bureau of the Public Debt: Savings Bonds
http://www.publicdebt.treas.gov/sav/sav.htm

Dear mother,

Thanks a lot for your useful comments. The answer given by Serenata is
excellent and very informative, but apparently I ended up buying
"Series I" bonds because of its high returns, security and other
features like tax exemption. Thanks a lot.

Have you considered a 529 plan? These are plans offered by every state
that you or anyone else can set up for a child. Anyone in any state
can set up a plan in any other state so you do not need to be a
resident of the state to use their plan. You make an initial
contribution and then additional contributions whenever you want.  The
state treasurer's office appoints an investment firm to manage the
plan, which grows tax free, and is distributed tax free to the child
for college expenses when they are old enough. If the child does not
go to college or does not use up the money, they can either take the
money and pay the taxes at their rate, or the funds can be used tax
free for any relative (sibling, cousin) of the child.