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Question for the Money Doctors

Question submitted on Apr 14, 2014.

Question

I'm 17 and turning 18 in a few days and when I was younger one of my parents died. My mother has been receiving SS money for me and due to my status as a full time student I will continue to receive money past 18. The check that came in the mail had my name on it, her name appeared no where on it. She doesn't want me to have access to the money for awhile so she is going to put it into a bank account and not let me access it. Do I have any legal right to that money that comes in my name after I turn 18? (The SS money will stop once I turn 19).

Answer

I am sorry to hear your father died when you were young. An premature death often times is a significant consequence for a family, and creates challenges that few can appreciate.

If a check is made payable to you it is your check intended for your care and support until you finish high school, until age 19 for you as you indicated. Your mother may want to make sure that the money is there for you to have a reserve for you when you either go to college, or begin work after high school, so the intentions are probably good.

If the account is opened in your name, and you deposit the check into your account, it will remain your money, and you will have access to it as you wish. It may be a good idea to open such an account and save it. While I don't have any idea how much you are receiving, the following example will show you how important savings are:

If you receive $500 per month for one year, that would equal $6,000. If you earned that or greater, you could, over the course of two years, transfer that money into a Roth IRA. If you invested the social security money, and you received normal long term market returns of 10%, your money would double about every 7 years (72/10 rule of 72s). What this would mean to you is a little sacrifice today would give you about $750,000 in tax free retirement dollars. It would grow as follows: Age 26: 12k, 33 24k, 40 48k, 47 96k, 53 192k, 60, 384k, 67 768k. While it is true that money would be worth less than today, you could have a significant monthly income for life because of a good decision made today.

One of the most striking examples of this is a guy I knew from first grade who became a stellar straight D student in high school. He became an auto mechanic whom I had lunch with over 10 years ago. He made the right decisions and grew his wealth by age 40 to $750k. Financial fitness often times is not how well we do in school, it is how well we make smart money choices during and after school.

If she asks you to endorse the back and she deposits it into her account, it is not in your account or control.

If the account is set up as a joint account, each of you have equal rights on the money that gets deposited into the account.


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