My mother's husband (who is a financial advisor) called me today to say that he wants to set up an UGMA/UTMA for my daughter (who is a baby). He asked for her SSN so he could do this and set it up with my mother (his wife) as the custodian of the account. He said he wanted to contribute around $5K annually to this as he has done for his other grandchildren.
I said, wow that's so nice. Here, I'll set the account up on my Fidelity account, where we already have a 529 fund for her, so we can as her parents manage them together and I'll send you the instructions for how you can contribute to it.
He said that wasn't the point, he wanted to be able to contribute to it in the same way he has for the other three grandchildren, be able to watch it grow and feel good about the account's growth over time. I said, great, I can send you the reports whenever you want them. As her father, I'd like to be the custodian of the account and set it up.
Then he said, nevermind, that's not what I had in mind, and now the entire offer is off the table.
I am not sure if I fully buy his reasoning that setting it up himself and being able to monitor the account to "feel good about its growth and manage the investments directly" are hte only reasons he wanted to set it up this way. Is there some additional benefit he would get by managing it and setting his wife (my mother) as the custodian, rather than enabling me to set up the account establishing myself as the custodian and having him contribute to it?
If he simply wanted to be generous, then there's no difference. But maybe there's some tax advantage I'm not aware of, or financial benefit that doing it his way is better for him?