My mother funded a 529(100K) for my daughter who also has a UTMA. My daughter received some merit scholarships and is in the enviable position of finishing school with some money left in her UTMA. However...My mother is arguing that the UTMA funds should be spent first for tuition and room/board. I feel this makes no sense...she'll be a at large University and living off campus likely for at least 3 years, all of the expenses of which would need to be documented and reconciled with the IRS...thats a lot for a college kid to have to think about...saving every reciept etc
My suggestion is that the first 20K each year come out of the 529 and goes directly to the college. The balance of $17K each year come out of the UTMA. This will leave 20K in the 529 in case she decides to stay for a 5th year MBA and will also leave her some starting out money after graduation in her UTMA.
What my mother is suggesting empties out the UTMA and leaves the 529 with about 75K in it (the only other grandchild also has a funded 529 and UTMA).
So which is best? Use 529 Funds and supplement with UTMA each year, leaving some money left over in the UTMA for "later" OR
Deplete UTMA and leave money in 529 which most likely will not be used?