Investing for underage child

[DaleT]

Been awhile since I posted here but figured with the vast knowledge maybe someone would have some insight or advice on a situation my family has recently encountered. My brother in law was recently killed in an unfortunate traffic accident. He was 31yrs old with an 8yr old daughter (divorced from the mother) and outside of a life insurance policy had very little in the way assets. We are looking to set up a fund of some sort using the insurance for his daughter to receive when she is older. The mother has proven to be irresponsible on many occasions so entrusting her to maintain the fund is not an option. I've looked into a trust, bonds, ira etc, where I'm hung up is the father and our family are all US citizens while the daughter and ex wife are Canadian (just one of the many nuances of living in a border city). Because the daughter has no US citizenship or Social Security number what are the tax implications? Obviously, any tax liabilities may, and probably will, change before any of these options mature but we are just exploring ideas at this point. We plan to contact a financial service for assistance in setting everything up but was looking for some real world experiences if possible.

 

[DaleT]

Re: Investing for underage child

Yeah, that's kind of what i assumed as well, we are very early in the process right now; basically just exploring options. Thanks for the advice though.

 

[foodfisher]

Re: Investing for underage child

Physical (hands on) gold. Rock solid as times change.

 

[NYBo]

Re: Investing for underage child

I'm sorry for your family's loss. I assume his daughter is named as beneficiary of at least part of the life insurance. Unfortunately, unless someone was named as trustee for his daughter in a will or other legally binding document, the mother would be the trustee by default to the best of my knowledge. Time to lawyer up.

 

[LippCJ7]

Re: Investing for underage child

I've looked into a trust, bonds, ira etc, where I'm hung up is the father and our family are all US citizens while the daughter and ex wife are Canadian (just one of the many nuances of living in a border city). Because the daughter has no US citizenship or Social Security number what are the tax implications?

Uh What? The daughters biological father is a US citizen? then she is as well, albeit a dual Citizen with Canada, it is possible her mother never filed but it may be worth looking at.

 

[1973Chieftain]

Re: Investing for underage child

+1^
In virtually every case a biological child will derive US Citizenship if either parent is a US citizen. PM me if you would like info on the specifics, it's part of what I do for work.

 

[DaleT]

Re: Investing for underage child

Yes, the paperwork was never filed for her to become a US citizen. Her parents were not married at the time of her birth but both are named on her birth certificate. My wife supplied both of her parents with the necessary forms when she was born; unfortunately, neither parent ever felt it was a priority. We do plan to seek professional advice for both the financial and overall legal issues that are certain to arise. Ultimately, we are looking to make sure that my nieces welfare is looked after. I'm sure our situation is not unique so much as uncommon and was curious if anyone may have had a similar experience from which we could draw some insight. Chieftan, I may PM you in the future with questions if that is ok with you. Again, thanks for everyones responses, as this is far out of my wheelhouse.

 

[aspeck]

Re: Investing for underage child

There are differing laws/ways to handle situations like this. They are all more complicated than a "normal" trust, but they are do-able. You will want professional help. Any of the major investment companies should have the tools to get you through this. If I get a chance, early this week I will ask one or all of my financial advisors to get their take on it.

 

[Bigprairie1]

Re: Investing for underage child

If her father was a U.S citizen and is on the birth certificate then, I'm pretty confident, she can apply for U.S citizenship without issue. The fact that the paperwork was not done at the time does not, to my knowledge, 'lead' with respect to her birth rite(s) for citizenship.
The trickier side of this is that as an underage person who can not legally apply on her own behalf.... she needs the mother to assist....and unless the mother sees a clear benefit...she may or may not want to. However she might get suspicious that you are moving in to try to seize the child on some grounds so tread carefully.
The other side of this, which is the trust fund should be pretty straight forward. If the fund is for her when she is older and its in her name (in the U.S), then the odds of her mother successfully wrangling that money 'early' are pretty low. If the funds are not needed or available/accessible until she is 18 and that is made very clear in the paperwork....then I think you are in good shape.
Like was previously mentioned tho'....talk to the right people about this to get good information so you can step through it correctly.
BP

 

[DaleT]

Re: Investing for underage child

Thanks guys. We are definitely going to seek a professional to assist us with setting everything up from both the legal and financial sides. No one in my or my wife's family is knowledgeable enough in the logistics of these transactions without the citizenship issues to even begin to tackle it. None of us believe the mother will pursue citizenship for my niece unless there is a direct benefit to the mother so we aren't holding out hope of it happening anytime soon. At this point we aren't pushing her on that issue either as we are trying to ensure that access to our niece remains open.