201: Estate Planning Misses: What Happens When Your Custodial or 529 Account Has No Successor

In this episode of Absolute Trust Talk, managing attorney Kirsten Howe continues her estate planning misses mini-series by tackling custodial accounts and 529 education plans. While these accounts are incredibly popular for saving for children, most people don't realize a critical legal distinction: you don't actually own them. This misconception leads to a costly problem when account owners die without proper succession planning.

Kirsten shares real cases from her practice where families ended up in probate court—spending thousands of dollars in legal fees just to access money intended for their children's education. The good news? This problem is completely avoidable with one simple form at your financial institution. Kirsten walks through exactly what you need to do for existing and new accounts, plus provides a bonus warning about donor-advised funds with similar risks.

Time-stamped Show Notes:
0:00 Introduction
1:10 What custodial accounts are and how they work—an adult manages money that legally belongs to a child
1:45 Age limits for custodial accounts in California: children can access the money at 18 or 25
2:15 Understanding 529 education accounts and why contributions are considered gifts
2:45 The common misconception clients have about 529 accounts: thinking the money is still theirs when, legally they've given it away
3:33 Where the trouble starts when a custodian or 529 owner dies without proper succession planning
4:15 The probate court reality: families need court intervention to fix these problems even without a full probate
5:00 The costly consequence of missing this planning step: spending thousands to access thousands
6:04 The simple solution is designating a successor owner for 529 accounts using forms from your financial institution
6:45 How to protect custodial accounts by designating alternate custodians
7:15 Action step for existing accounts: call your financial institution to verify you've designated successors
8:00 Donor-advised funds present similar succession planning challenges
8:21 Final reminder: talk to your financial advisor about donor-advised funds to ensure you've dotted all the I's and crossed all the T's

Take the Next Step in Your Estate Planning Journey

If this episode resonated with you, we'd love to help you with your own estate planning needs in California. Schedule a complimentary discovery call with our team at Absolute Trust Counsel. During this no-obligation conversation, we'll:

1. Learn about your unique situation and goals
2. Answer questions about our services
3. Determine if we're the right fit to work together

Visit https://absolutetrustcounsel.com/scheduling/ or call 925-943-2740 to schedule your free discovery call today.

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