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It seems a little strange that they actually asked you to pay off $10k in student loans, particularly for the SIL. That should be easily paid by themselves with their own income.
I know very little about 529s as they came out too late for our children, but if you sign it over could your daughter be pressured to contribute to her husband’s eventual nieces and nephews also? I can really see some issues there depending on family dynamics.
With the divorce rate as it is, be very wary of losing control of your money. I have had some friends really burned by paying major house downpayments only to have the DIL or SIL walk off with half the money after a divorce settlement.
they hear that a new law lets you pay off student loans (up to $10K lifetime limit) with unused 529
But that unused 529 is not theirs to use; it is your grandchildren's. If you have more than one child, you will have other grandchildren than just their children.
They make plenty, and can pay off their own loans. Time to cut the cord and get them to realize that they are grown adults that should be taking care of themselves, not borrowing from Mommy & Daddy. That ship has sailed.
@karaG - again, Thank you. It is very helpful for me to hear other people's views / thoughts like yours.
I hadn't given any thoughts of the initial request, from our daughter, which is basically 'SIL has $10K left on his student loans, can / should we use (my daughter's 529) to pay it off based on the new law that lets you use it that way'.
I may have a warped view of money. They (daughter and SIL) and the their kid(s) are a unit / our family. We are all on the same team. While not legally correct, my view is that our money is (will be) their money, at the latestst, when we kick. If we need help, I would like to think they would help. And vice versa (yes, we've been (VERY??) fortunate that our kids have turned out well. If that wasn't the case, I would likely have a very different attitude : )
But he / they have a (very reasonable?) student loan debt. Who in the family pays it, at least to me, is a moot point (if it was a stupid debt - gambling, etc., I would certainly have a different view). It's all 'family money'.
And while this whole thing has frustrated me because of my general paranoia / not having definitive answers, I think my daughter's question reflects good thinking.
She 'has' the 529. it CAN be used for the SILs student loan debt. It IS her's to use as she wants. She's asking me, rather than telling me about the 529 and his loan.
............ I think they hear that a new law lets you pay off student loans (up to $10K lifetime limit) with unused 529. .........
........(interesting angle to look to his parents for the money..........He IS married with a kid. I think he's off the family payroll - .
He is off his family payroll and now he is onto yours?
OK, now I find that interesting that the amount he needs to pay off is exactly the amount that the law says can be used to pay off student debt.
The money is not hers. It is yours, saved to pay for college, not money saved to give to your daughter for other things. You would not be giving her $10,000, you have to sign it all over to her and if she is not extremely careful the money would very quickly become community property.
Just say no. That the funds are now for college for the grandkids and they can afford to pay such a small debt so they should do so and get it over with.
I'm rounding when I talk of 10K due on the loan. But I do hear what you are saying!!
And truth be told / this might open another can of worms re your comment - the money is not hers....
My main intention with overfunding the 529s for both our kids was a cheap? way to get money to next generations? Rather than costs of lawyers / trusts / etc.
(side note... years ago, I was going to get a $500K? life insurance policy and somehow we stumbled on a lawyer that said we should put it in a trust and sent us a MANY page doc / trust to put the insurance policy into. More pages than the insurance policy and more cost than the 1st year of the life insurance : )
@oregonwoodsmoke My main intention with overfunding the 529s for both our kids was a cheap? way to get money to next generations? Rather than costs of lawyers / trusts / etc.
Certainly a decent idea, but be aware there are some potential concerns when it comes multi-generational use of 529 plans.
This is rather problematic, if you consider the implications of your daughter now asking for you to pay off his loan. With that many degrees, especially if they add up to a PhD like mentioned before, he should have a great job and be proud to pay off his own loan, not be a beggar to his wife, and indirectly, his father-in-law.
Last edited by Lizap; 10-19-2023 at 12:23 PM..
Reason: Clean-up
Well I do not have a sil but I would not be paying off his debt, if I did. He is old enough to do it himself. I can't imagine the payments on a 10k loan are that high, & if he has 5 degrees, he shoudl be earning enough to pay it back easily. Save it for the gks.
She 'has' the 529. it CAN be used for the SILs student loan debt. It IS her's to use as she wants. She's asking me, rather than telling me about the 529 and his loan.
I think I may be misunderstanding something here. Who owns the 529 account in question? You or your daughter? If it's yours, then ALL of the money is under your control. There are tax implications if you use it for non-educational purposes, but the fact remains that the money remains under your control. But if you sign the account over to your daughter, then all of it becomes hers, and you are out multiple hundreds of thousands of dollars. If you're OK with that, then go ahead. But if you want to retain control over at least some of the money in the account, then do not sign it over to your daughter.
He is off his family payroll and now he is onto yours?
OK, now I find that interesting that the amount he needs to pay off is exactly the amount that the law says can be used to pay off student debt.
The money is not hers. It is yours, saved to pay for college, not money saved to give to your daughter for other things. You would not be giving her $10,000, you have to sign it all over to her and if she is not extremely careful the money would very quickly become community property.
Just say no. That the funds are now for college for the grandkids and they can afford to pay such a small debt so they should do so and get it over with.
I agree with this view as well. OP's SIL has attended school long enough. Past time for him to transition into a student of life. He needs to learn a life lesson in the process. Support yourself and the family you chose to have. Pay your debts. I agree the 529 money belongs to the OP, not his daughter and certainly not her financially solvent husband.
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