Long story short, a good friend is fostering with intent to adopt. She has legal custody and the teenager just inherited a small amount – $60k – from her family’s estate. Basically the entire family has died of overdose (or other mental illness/life decisions). Dad’s alive and not a good human (will
Definitely try to manipulate this money out of her without any guilt at all) but has signed over rights.
Obviously my friend is trying to save this money for her to have once she’s old enough (thinking 21 or 25) to make some good decisions with it.
Question is, what’s the best option to keep it safe and possibly grow it?
Few extra details – her GAL has requested and won a court order preventing this money from being taken by DHHS and she does intend to go to college.
Protecting funds for teenager
byu/Da2edC0nfu53d inpersonalfinance
Posted by Da2edC0nfu53d
4 Comments
Everyone will say depending on when she’ll need access. Need / Want is different and that’s an adult conversation and personal finance lesson to have. She should not buy a car, home, or new fun thing with it. If she has debt, then its likely the first place to go to (others will need more details).
We can assume she’ll get a job, find a place to rent with roommates, and maybe go do a degree in the future. You can do education savings or you can full match into a Roth IRA when she does have work income. It’ll sit in there until her retirement.
Assuming she’ll need it for whatever reason at that age you’re thinking of, high yield saving or money market for safety.
Probably a special purpose trust (education, health expenses, etc.), which becomes accessible in its entirety upon her reaching a certain age.
The wiki has good advice on money saving for teens (bot will respond to my comment). You should check in with the folks working at the foster system to see if they have professionals you can consult. They should be able to advise what you can/can’t do with the kid’s money. State laws will differ.
Barring any legal hurdles, A high yield savings account is a very safe, low-reward option. Index funds may be a more appealing option, particularly if you’re looking to have the funds sit for ~10 years.
She should get the money at 18 when she is an adult. (Unless the money came with any conditions on a will/trust that state otherwise. )
If this money is intended for college why would your friend want to hold it in an account tilll she is 25 ?? That doesn’t make sense.