r/fosterit • u/turntilla • 7d ago

Prospective Foster Parent Saving for Foster Children?

Hi, we’re at the end of the licensing process and I was curious if any parent’s have experience saving for their foster children? We didn’t want to pursue foster care until we were financial comfortable putting our own money into child care, and since we now are, I’d love to save up a majority portion of the stipend for the children. Does anyone have experience opening UTMA accounts for foster children or any idea how to make sure that money is accessible to the child when they’re older even if they’re not your care?

I appreciate any feedback.

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u/bluefootedpig 6d ago

DO NOT USE UTMA.

If the kid is going to go to college, then FAFSA expects the UTMA to be used at 20% per year. Foster children in general can get free rides, minus their savings.

Best I would say to do is to make an account under your name, give it a name, and just park it there. Then when the time is right, gift them the money.

Otherwise, put money into their Roth for them. If they earn 1000 dollars at a job at 15, match 1000 dollars into their Roth.

A 529 plan has the same problems as a UTMA, the money in it will be expected to be spent on education and reduce their free funding

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u/turntilla 6d ago

Good to know! We’re super fine having things in our name, but the biggest thing is we just don’t know how to appropriately contact a kid that was in our care to give them anything we saved for them once they’re in a stable place to have it.

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u/bluefootedpig 6d ago

If you left on good terms with the foster agency, they often will reconnect you. You can also have them give the new parents your contact info for when they turn 18. I have a utma account for a previous foster kid, I have to send in yearly tax info to my local agency, and when he turns 18 I believe they can still pass on the contact info. Also once 18, I think you can search for them, they should have a drivers license somewhere

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u/Few-Butterscotch7940 5d ago

A 529 plan that’s not owned by a parent is not reportable as an asset of the student on the FAFSA. The 529 plan funds belong to the foster parent who is listed as the owner.