Hello,
I am new to the '529' world, and I have some questions about a unique situation. I'd appreciate any help that you can share to help point me in the right direction.
I would like to setup a '529' plan for a family friend who recently entered high school. I know they're going to have trouble affording college due to several reasons. What I'd like to do is setup a '529' and try to solicit donations from different sources. Even if these are minor donations, I think they would add up over time, and I'm committed to trying to make something of it.
I would like to establish the '529' so I have a legitimate account and proof that I can provide to prospective contributors to show what I'm trying to do. (I have some pictures and a good story to tell that I'd include with each request).
The end goal would be to surprise this family once the account had grown to a sizable amount. Of course the ultimate goal is to fund a full 4-year degree, but my more realistic goal would be to get the 1st full year covered. That way I could make it possible for the student to pursue many colleges, including out of state if they desire to. At present, I think local community college is all that could happen in a few years, due to cost. While that's a fine option, I really want to try to open up the possibilities in this case. So the goal would be to have this read by the time the student entered their senior year... as the 'surprise' could suddenly make a whole new world 'unveiled' to them.
So, can I establish a '529' for this purpose? I am aware that I'd have to list myself as the account owner in order to keep it a surprise. But, can you name a beneficiary without them knowing? For instance, can I name the beneficiary without the parents getting contacted? And then, at that point, does the account owner have to write it into their living will to make clear the beneficiary?
Also, would there be any personal penalties to my finances (as account owner) if I were to do this?
And lastly, what kind of plans would you recommend? I live in California. I have browsed different plans and looked at Morningstar ratings, etc. I see that you can invest in an out of state plan, but I also see a lot of people suggesting to look at your own state's plans first.
I would be able to establish the account with a very modest amount, but I expect it would grow slowly until I received a few successful donations.
Thank you so much for your help.