Mom says she has savings accounts for her bio kids, but not for her stepdaughter (2024)
If you love other people’s drama, you must love Reddit’s “AITA” forum, where strangers go to ask the internet if they’re in the wrong about some of life’s most unhinged situations. And today, there’s a real doozy in there —a mom is asking if she’s wrong for having savings accounts for her two biological daughters’ futures, but not her stepdaughter.
I have to admit, this is one where I was ready to proclaim the mom the a**hole and move on before I even read the post, but the situation is a lot more nuanced than I expected.
“My partner and I got together 4 years ago. I was child free and he had one kid 8f from a previous marriage. 8f was 4 when we got together,” OP wrote. “I immediately took on caring for her for half a year bc her mom needed to “get her stuff together” after a bad relationship and I WFH so it made sense. All of that to say; since she was 4 I have taken an active role in parenting/nurturing her even when I was told I’m not her mother and have no say even though I did/do 99% of her care and needs when she is with us. I got pregnant quick (4 months together) And had my first 3f and then my second 1m when my first was 8 months old.”
OP wrote that when she found out she was pregnant, she started a savings account for her unborn child and started diverting money there from each paycheck. When she got pregnant with her second baby, she doubled the amount she contributed from each check so her kids could have equal amounts. She plans to give the money to her kids after they graduate. An important thing to note is that her husband, the kids’ dad, does not contribute to their savings accounts at all.
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“I asked him if he and her mother started saving for [stepdaughter] and he said they hadn’t discussed it or ever started anything. I said he probably should since as her mother isn’t reliable in terms of money and our two will in fact be given that money after graduation and I don’t want any animosity over it,” OP wrote. “He said that’s true and we left it at that. I don’t ask questions bc she’s not my kid as I have been told so I never mentioned it again.”
OP said the topic came up later when she was with friends, but they said she was an a**hole for not saving for her bonus daughter. So she wanted the internet’s opinion —is it true?
“I will ensure she is safe, fed, and knows she is loved when she is with us but she’s not my child or my responsibility so why would I take away from my bio kids to give to her when she has 2 parents that can do for her what I do for mine alone?” OP wrote. “I don’t see why I have to do what her parents don’t care to.”
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Oof. There’s a lot to unpack here.
After a lot of comments, the internet ultimately ruled that OP is not the a**hole in this situation for one main reason: She’s the only one, out of three total parents, contributing anything to any kids’ financial futures. Many commenters realized that the stepdaughter’s biological mom may be a lost cause, but pointed out that’s it’s time for all three kids’ dad to step up financially.
“He isn’t contributing to any of his kids’ savings, why should you have to carry the load for all three?” the top comment reads.
Another highly rated comment adds, “YWBTA (you would be the a**hole) if you don’t ride your husband’s ass to do the same for his daughter, unless he somehow will be able to fund college anyway, and will be funding it. She’s already 8 years behind, and with how her parents are doing this is gonna blow up badly.”
Several commenters pointed out that it isn’t fair for OP to pay for three kids while the stepdaughter’s biological mom pays for none.
“She has 2 parents who should be capable of saving for the girl, so any contribution from you would be bonus. It’s not fair for you to contribute to the girl’s saving unless the girl’s mom contributes to your kids’ savings as well,” one wrote.
Another added, “I’m sorry, nta. Is her mother saving for your kids?”
But this comment sums up the whole situation pretty nicely: “The dad needs to step up and sort his responsibilities, he is literally paying for 0 kids so you shouldn’t have to pay for 3!”
With savings accounts, funds are less accessible, since these accounts are made to store money for financial goals. Checks can't be written against them, and you're generally limited to six free withdrawals or transfers a month from the account.
You can choose a traditional or Roth IRA for your custodial account. Contributions to traditional IRAs are tax-deductible; your grandchild pays taxes when funds are withdrawn. Contributions to Roth IRAs are made after-tax; no taxes are owed upon withdrawal.
There are many benefits of opening a savings account for a child, such as: Helping them learn to plan ahead, as well as stay focused on goals and priorities. Teaching them to save for the things they want until they can afford it. Showing how their money can grow, thanks to compound interest.
Depending on the type of savings account, a grandparent can open a savings account for their grandchild. In most cases, you'll need to provide the child's birth certificate to set up the account, though the documentation required will depend on the account provider.
You can open a savings account for a grandchild today
Opening a savings account for a grandchild is a generous, forward-thinking thing to do. “If you can afford it, it's a great way to set up your grandchild for success,” Bessette says. Financial planning for a baby isn't easy or cheap.
Money market accounts are worth considering as well; they're FDIC-insured, and combine features of checking and savings accounts. U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government has never defaulted on its debt.
Money-market accounts tend to have higher APYs than high-yield checking accounts, and lately have been on par with high-yield savings accounts or CDs. “The advantage of a money-market account is you have access to those funds immediately and there's not a penalty.
If you're just looking to pay for everyday expenses, a checking account is the way to go.If you're focusing on growing your money, a savings account is a better fit. Regardless of the account type you choose, make sure you pick one suited to your financial needs and goals.
The paternal grandfather has two potentially uncertain kinship links and is therefore expected to invest the least, which is in accordance with most empirical findings.
Children's savings accounts can be opened in your grandchild's name and anyone can make deposits. Most banks and credit unions offer these. Look for accounts that don't require high minimum balances or charge fees for low balances.
Interest earnings for a children's savings account are subject to income tax if they exceed a certain amount. If your child's interest, dividends and other unearned income total more than $2,200 in one year, the unearned income for certain children might be hit with federal taxes.
You could add them as an agent under a power of attorney or add them as a designated beneficiary to that account and that is something different, but making a child a joint owner on a bank account is almost never a good idea.
Unlike regular savings accounts, children's savings accounts often come with additional perks such as: No monthly account fees. Low to no opening balance requirements. Online learning tools to boost a child's financial education.
Annual gift tax exclusion: you can give up to $16,000 per year per grandchild without triggering gift tax. If you have two grandchildren, for example, you can give up to $32,000. If you have three, you can give up to $48,000, and so on. 529 Plan: Contributions to a 529 plan grow tax-free.
Opening a financial account requires personal information. To open one on your grandchild's behalf, you will need their full name, birthday, complete address, phone number and Social Security number. Plus, you will submit the same details regarding yourself or another adult, like a parent, who will oversee the account.
If your child's interest, dividends, and other unearned income total more than $2,500, it may be subject to a specific tax on the unearned income of certain children. See the Instructions for Form 8615, Tax for Certain Children Who Have Unearned Income for more information.
Gifting money to grandchildren can be an excellent way of reducing a looming inheritance tax liability – but not everyone has to pay the dreaded bill. Inheritance tax is charged on the value of your estate – that's the value of your property and your wealth – when you die.
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Introduction: My name is Cheryll Lueilwitz, I am a sparkling, clean, super, lucky, joyous, outstanding, lucky person who loves writing and wants to share my knowledge and understanding with you.
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