Expert: Paul Henneman - 8/26/2009

Question
My best friend is having a baby, and I'm interested in collecting donations from our mutual friends and starting a college fund for the baby.  Can I legally do such a thing?  Would I be able to start something like a 529 plan and transfer it to the mother later?  Or is it a better idea just to give them a check and let them decide what to do with it?

Thanks for your help!

Answer
Erin,
  Thank you for your question! Yes, I believe that you can set up the 529 plan yourself in the child's name, you do not need to be a family member. You could then transfer it to the mother later.
  Here is a helpful link I found that briefly discusses the main points regarding a 529 plan, including your question:

http://www.collegesavings.org/includes/pdfs/Top529Myths_FNL.pdf

  These types of plans are actually very adaptable, and in my opinion would make an absolutely fantastic gift to a new baby.  The best investments are ones that have a long time to work, and by doing it now there is plenty of time for growth of the investments. And, future birthdays and holidays would be good reasons to add some additional contributions, further increasing the amount invested for future education.

I hope this helps, please do not hesitate to follow up with me if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com