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When Grandpa Reneges on Promised Money

Feb 21, 2007 | | Comments Comments Off

Dear Liz: In 1985 my father set up a Uniform Gift to Minors Act brokerage account for my son. By 1997, my father had withdrawn all the money and put it back into his personal account. My son should have gained control of the money last year, but there was nothing left. Didn’t the investment firm have a responsibility to prevent my son’s grandfather from doing this?

Answer: In a word: no.

Your father is the one who is ultimately responsible for his actions. As custodian, he had the legal right to withdraw money and use it for your son’s benefit. It’s not up to the brokerage firm to police what happened to the funds after they left the custodial account.

What your father did was, of course, wrong – legally and in every other sense. Once the money went into the account, it belonged to your son.

Your options at this point, however, are pretty limited. You can point out the funds weren’t his to take, and ask him to return the money. If he refuses, your son could sue him, but lawsuits among family members tend to make future holiday gatherings rather tense. Unfortunately, this kind of situation isn’t uncommon, and many families decide the fight to regain the promised money isn’t worth the upset.

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Categories : Kids & Money, Q&A