by Garrett Gilbertson

A few years ago I did a self-audit where I consider the direction my life is going and what I needed to do to better align my behavior with my values. While my professional life was excelling I spent a considerable amount of time reflecting on my parenting. I was faced with the fact that I had not spent nearly enough time working to set  my daughter up for success. She was 4 years old and I had not yet put away any money for her future. I knew I should be investing for her, but I had no idea how or what investment vehicles to use that would set her up for success later in life. 

 

I set out to educate myself on what investments would offer the best returns, flexibility and tax advantages for my family. After reviewing the landscape of different investment and savings accounts for children I came to the conclusion that UNest was the best solution for my family. If you are like me and prefer flexibility, automation, and mobile access then continue reading as I intend to break-down why I decided to open a UNest account for my daughter. 

 

UNest accounts are not explicitly designed as a savings account for a child’s college education. However, many parents utilize them for precisely this purpose and receive tax advantages. UNest’s custodial account’s main objective is to hold and protect assets for a child until they reach adulthood. These assets may be used for college or whatever your child needs in the future, e.g., a home, car, wedding, etc. 

 

UNest accounts provide many of the benefits of a 529 plan while also giving greater flexibility for how parents use the funds. UNest accounts are an especially timely solution when heading into periods of economic uncertainty like we currently find ourselves with the pandemic. UNest accounts allow adult custodians to establish accounts on behalf of child beneficiaries. In contrast to 529 plans and Coverdell Education Savings Accounts, the additional flexibility combined with tax savings made UNests a compelling solution for my family.

 

Here are the questions I found myself asking prior to signing up for a UNest account. I summarized my findings below with the hope that they can help parents everywhere. 

 

Am I eligible for a UNest Account?

Any minor can be named as the beneficiary of a UNest account. The custodian can be the child’s parent, grandparent, or another adult. The donor and custodian need not be the same person or entity. UNest launched UGift to make it easy for family members to contribute to your UNest accounts and incentivize them to set one up as a gift. This is great for me because it makes it easier for my parents to add money to my daughter’s account.

 

What Assets go into my UNest Account?

UNest accounts are permitted to hold nearly any type of asset, including stocks, bonds, mutual funds. UNest accounts’ ability to fit various securities for children’s benefit is a significant benefit because minors do not have the right to enter into contracts. A custodian of a UNest account has a fiduciary responsibility to manage the account’s assets. It is permitted for the minor’s benefit to modify the account’s asset allocation mix at his or her discretion. UNest is here to help parents and grandparents navigate this allocation with their age-based approach to investing! I appreciate this feature because it takes the guesswork out of picking my own investments. 

 

How do I establish a UNest Account?

I only invest in companies that I trust that are aligned with my values. I realized after digging into UNest that the company was founded to address the large and growing disparity between wealthy individuals with financial planners and everyday Americans. Their goal for launching the UNest app is to close this gap and provide clients like me with the tools needed to invest in their children’s future without the high fees attached. They have accomplished this with their easy to use mobile app that you can download here. When a UNest account is established on their mobile app, a custodian and the account’s beneficiary must be named. Custodial ownership may be later transferred; however, the designated beneficiary is fixed and cannot be changed. 

 

How Can I Contribute to my UNest account?

Anyone may donate to a child’s UNest account via the UNest app without limit. All monies received into a UNest account are the child’s irrevocable property – they may not later be reclaimed by the custodian or donor(s) under any circumstances. UNest is a great way to build a better future for your child by encouraging family members to contribute. It also results in a lot less wasted money on toys that are never played with!

 

How are UNest Accounts Taxed?

There are lifetime gifting limits on UNest accounts. The vast majority of Americans don’t have to worry about approaching these limits. The first $1,050 of earned income from investments in the UNest account is tax-exempt, and any additional income up to $1,050 is taxed at the child’s (most likely nominal) tax rate. Earned income from a UNest account above $2,100 is taxed at the parent’s s tax rate. 

 

I hope, after reading this, you realize that you don’t have to be super wealthy to make a meaningful difference in your child’s future. UNest proved to be the best vehicle to help me plan and execute an investment strategy for my daughter and I encourage you to check them out to see if they are a fit for you too. Regardless of what you chose consistency is key and the earlier you start the better position you will be for long term success.

 

Ksenia Yudina, CFA, MBA

Founder and CEO

Ksenia is the Founder and CEO of U-Nest, the first mobile app that makes it easy for families to save for college. As an entrepreneur and finance professional, Ksenia has focused on alleviating the impact of student debt on families across the economic spectrum. Previously, Ksenia was a Vice President atCapital Group/American Funds, the largest 529 provider in the U.S. In this role, she played a leadership role in helping parents plan and manage their finances, with a focus on the future well-being of their children. Prior to Capital Group/American Funds, she was founder of a residential real estate company. Ksenia earned her bachelor’s degree in finance from CaliforniaState University Northridge, and an MBA from UCLA’s Anderson School of Management.

Mike Van Kempen

Chief Operating Officer

Mike joined U-Nest in September 2019 as COO. He was previously at Acorns, a financial wellness platform, where he spearheaded the analytics and growth initiatives. Mike successfully expandedAcorns’ paid acquisition strategy, adding over 4.5 million investment accounts. Mike began his career in strategy & analytics at Belly, a Chicago-based loyalty startup in 2012. At Belly, Mike led projects that fueled growth across all aspects of the business, growing the customer base from1,000 to over 11,000 merchants, and accumulating a membership of over 2 million customers.Mike holds a B.B.A. in Finance from Loyola University of Chicago.

Steve Buchanan

Chief Technology Officer

Steve has over 20 years of experience in delivering digital innovations in the financial sector. Steve previously orchestrated product architecture and innovation as a Solutions Architect/ Fintech consultant at Union Bank. Prior to Union Bank, he was Chief Architect and Director of Engineering at Calypso, a Silicon Valley startup, where he architected and built multiple financial solutions. He was also Head of Global Integrations at Globe One in Vietnam where he integrated its Peer-to-Peer lending products into core banking solutions. Steve also built the first ever electronic Equities &Equity Options trading systems for Scottish stock brokers Wood Mackenzie (acquired by CountyNatWest). He is a graduate of Edinburgh University.

Peter Mansfield

Chief Marketing Officer

Peter has built an impressive track record in multiple financial industry segments including payments, credit/prepaid cards and lending. He has played an instrumental role at a succession of financial industry leaders, co-founding companies such as Brand3 (acquired by American Express) and PropertyBridge (acquired by Moneygram), and, as the early stage marketing lead at Marqeta (where he was team member number two), BillFloat and WallabyFinancial (acquired by Bankrate).He has helped fast-growth companies reach an aggregate market value of close to $8 billion. Peter holds a bachelor’s degree in economics from the University of Angila, UK.

Sonya Kidman

Client Relationship Manager

Sonya Kidman is a Customer Success professional with a decade of experience in advocating for consumer through user research and genuine empathy. Sonya specializes in user behavior and regularly attends national and global training sessions in wellness and people analytics tools. Sonya is a true global citizen was born in Russia, grew up in Israel, lived and worked in Canada and NewZealand. That global expertise along with an undergraduate degree in Sociology from Tel AvivUniversity have helped to shape a bullet-prof Sonya's framework to develop a winning customer strategy.

Frank Mastrangelo

Board Member

One part banker and one part technologist, Frank spent his early days with the Annenberg Foundation and PNC Bank. His career path led him to Jefferson Bank, where he led the build-out of its electronic banking platforms, and where he would forge a powerful alliance with The Bancorp co-founder Betsy Z. Cohen. As President and COO of The Bancorp from its inception in 1999 Frank played a critical role in helping the organization become an industry bellwether for branchless financial services and a global leader in payments. For this, he has become a widely respected fintech expert, and thought-leader. Frank was recognized in 2013 by Banking Innovation, a leading industry journal, as an “Innovator to Watch.” and as one of the innovators shaping the future of banking. Frank is a graduate of West Chester University of Pennsylvania.

Disclosure

College Savings Calculator is a hypothetical tool that demonstrates how monthly contributions, age-based asset rebalancing, and tax savings may impact the long-term value of your account, and do not take into account a portfolio’s underlying investment management fees. Calculations assume the private institution cost inflation is 2.8%, public out of state cost inflation is 3.9%, public in state cost inflation is 2.7%. Portfolio is assumed to have only stocks and bonds. Monthly equity returns are based on the historical data from the 10-year track record of the stock market (SPY). Monthly fixed income returns are based on the historical data from the 10-year track record of the bond market index (AGG). The current college expenses are provided by the collegeboard.org. Actual account performance may differ due to market fluctuations, changes in recurring investments, and asset allocation. The information provided here is for illustrative purposes only and does not represent actual or future performance of any investment option and is not intended to predict or project the investment performance of any security or index.