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Legal / Ethical Question

Posted by sweeby (My Page) on
Tue, Apr 28, 09 at 17:00

I'm curious what your opinions are on this, realizing that the 'legal' answer and the 'ethical' answer may or may not be different:

When older DS was born 18 years ago, my grandmother, bought two savings bonds. The bonds were titled 'Sonny' (his real name, clearly) with my name as 'POD' (payable on death), and the letter accompanying the gift clarifiying that the bonds were intended for Sonny's education. Since then, Sonny's dad and I got divorced, Grandmother passed away, and Sonny has come of age and is planning to head off to college in a few months (expensive private liberal arts college). The savings bonds were kept in my safe deposit box, and Ex, who is a financial professional, has been preparing Sonny's tax returns and paying any taxes (minimal) that may have been due on any capital gains from the bonds.

When Ex and I divorced, we agreed verbally (I can find nothing in writing) that he and I would each start a college fund for Sonny, investing a certain amount each month, and that we would split college expenses 50/50. No mention was made of the savings bonds. I saved specifically for Sonny as per our agreement; Ex didn't, planning to pay for college out of a combination of earnings and investments when the time came. He's a high-earning stock market 'player', and reasonably assumed he'd have a hefty portfolio. I don't know what has happened to Ex's investments other than that they got 'hammered'. Mine too ;-(

So now Ex is asking about the bonds...

I'm guessing that legally, the bonds belong to Sonny and that ethically, though probably not legally, those bonds should be used for Sonny's college.

My question is if ethically, those bonds should be used against my contribution (since they came from my side of the family), or 50/50 against the entire obligation?

Your thoughts?


Follow-Up Postings:

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RE: Legal / Ethical Question

Gosh, that is a tough one.

I am inclined to think that they should be applied towards YOUR contribution. I say that just because of the letter that specifically states the bonds are to be used for your son's education. It's not like you are dipping into your son's savings account and saying "oh, here is some of my contribution."

Does your son even know the bonds exist? I would be inclined to not tell him and just apply them to his tuition, if you can legally do that. I say this because we have had similar conversations. My grandparents have set up educ. trusts for all the grandkids, and now my daughter, the first great-grandchild. Hers is set up a bit differently, as a custodial account. It's kind of screwy (and honestly, my dad who is a financial advisor, was kind of irked at the way it was set up) because when DD turns 18 she could walk into the bank and withdraw the entire amount, no questions asked. We are talking about enough to pay for 4 years of private university--so this is a lot of money. My dad has told me over and over that DD really should not even KNOW about this money. We hope she will be a responsible, well-adjusted young adult--but still--an 18 year old having free access to that money is kind of frightening.

Anyway--I would first see what you can legally do with the bonds and if you do need your son's signature, then I would get him on board with using them for tuition. And yes, I think you could ethically apply that amount towards your contribution.


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RE: Legal / Ethical Question

Maybe you could apply it to the extra things for college such as meal plans, dorm room or apartment furnishings, books, lab fees.....Those kinds of things. Things that aren't usually included in tuition.


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RE: Legal / Ethical Question

My take is that grandparent gifted the bond to DS. It's HIS. It can't be put in his name when he's a minor so your name appears as parent. Your agreement to share college cost 50/50 should be in writing, so I can't say what the legal standing is to enforce it. However, morally dad should pay half.

First, the bonds were given with a specific intent, to pay for college. They should be used first to pay for college and any additional costs over and above the bonds should be split 50/50. That is what I see as fair, morally. Legally, it would depend on the laws in your state.


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RE: Legal / Ethical Question

I dont know what putting both names on it means. Was it payable to you only upon Sonny's death?

A verbal agreement isnt worth the paper it is written on.


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RE: Legal / Ethical Question

Messy, messy, I know...

KKNY - I SWEAR I put this stuff on paper, and the only sticking point was the phrase "as additional child support" before the "Ex agrees to pay". But I can't find it anywhere in the decree, and that still doesn't address the savings bond.

Hadley - I'm not sure if Sonny knows about the bonds or not, but rest assured, Ex will tell him if push comes to shove.

Ashley - Those extras would be split 50/50'ish anyway, though I'd probably agree to half of what the college recommends as spending money, and Ex would give more since it's important to him (not me) that Sonny have a somewhat higher standard of living than most of his classmates.

Ima - The bonds are probably enough to pay for about one full year. I don't know for sure since Ex has been doing all of the record-keeping.

Two other points:

- Sonny's current plan is to continue on the medical school after college. I think that will change, but grad school will probably be in order in any case. I was thinking Sonny's Savings Bonds could be applied against grad school tuition, since I never promised Sonny anything other than half of 4 years at the best school he could get into. And I've told Sonny that once his college fund is gone, it's gone and he's looking at loans.

- Historically, Ex's view has been that anything that's his or from his side of the family is his, and anything that's mine is half-his! So there's no question in my mind how he would feel if the situation were reversed. But that doesn't make it ethically right for me...

I appreciate all of your thoughts!


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RE: Legal / Ethical Question

The problem is that relying on "historically X treated stuff from his family as his" is that was then, this is now.

Good luck.


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RE: Legal / Ethical Question

It is tricky and I dare say when we're struggling we tend to look to solutions we wouldn't normally consider.

Legally and ethically, since you were only the trustee as it were, and the funds were clearly designated for sonny, I can't see it making up 'your part' of your contribution.

If you are struggling to make ends meet, though, you have to ask yourself what you can realistically contribute. Those funds will get him started, and perhaps you and your ex have to reconsider what you can do.

I had to revise certain plans and even promises to my girls when I divorced and for one reason or another ended up with very little, once those kids are grown our legal obligation to them, for the most part is over. Of course we want to help them any way we can, but things change.

People, our kids included, have to accept that. We do our best to provide but things do change.

If ex was arguing that a family contribution on his side comprised part of his college contribution, you could counter with yours, otherwise, it's square one.

I had a sort of similar situation, my family helped my ex and I with a very generous deposit on a house. We couldn't have bought it without them and for a time they co-signed the loan (I was glad to take them off it when we refinanced) Some years later, ex's grandfather passed away, and left her some money. Amongst a few other things she decided she was going to take the kids on a holiday, but didn't think she wanted me to go....(and this from a person who thought our marriage was 'all right' and acted in shock when I left) and put the kids on the spot by asking if they wanted me to go - given the family dynamic they said no, but I told her I thought the whole idea was reprehensible.

She bleated on and on about how it was 'her' money and it wasn't right etc etc, until the penny suddenly dropped and I said "what about 'my' money from my family that helped us buy this house?"

She never brought it up again. When we divorced, the settlement completely ignored the money from my family, so I ended up not very well off. She kept the house and I kept another property, it all ended up academic because there wasn't that much to go around.

She still feels hard done by, I'm sure. The kids had a roof over their heads, though.


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RE: Legal / Ethical Question

Hi there,

I see it as a gift for education to your son. Dosn't matter if its on your side to me, Its your SONs money for education.
That being said, that money should be to yoru son to use for education and after its use, any addition costs for education should be split 50/50 between you and your ex husband.
I can see the temptation of saying its on your side of the family and that exhubby would do something like that BUT, to me ethically and legally this bond money belongs to your SOn. not to you , not to yoru husband. Your name was placed on it at the time because he was an infant.
Focus on the fact that its your sons. Not yours or ex.... It makes the decision easier in that light and doesn't involve your feelings with ex or your divorce.
Grandma, didn't consider when giving the money that you may divorce etc..etc..she made it clear its for sonny's education.


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RE: Legal / Ethical Question

I think my advice would be to tell X that counting the bonds as part of your contribution you are prepared to contribute 1/2 of his college expenses up to x amount and see what he says.


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RE: Legal / Ethical Question

I think that what is ethically correct depends on who the money legally belongs to-- this is based on two assumptions. 1) Grandmother could have chosen to legally give the bonds to either you or Sonny and 2) she made the decision she did intentionally.

If the bonds are legally yours, I would say she gave them (intentionally) to YOU for the purpose of helping you give your son an education, and they should go towards your share.

If they are legally his (which is what it sounds like to me from your description, but I'm not at all sure of that) then the money is his, and if he is lucky enough to have parents who have already agreed to fully fund his education, then he can spend it as he wants. Letting him put it towards grad/med school seems appropriate if he is expecting to pay for that himself/with loans.

I really don't see any justification for any of it going toward's ex's share, if that wasn't specifically called out in the divorce. It was a personal gift, either to you, or to Sonny. It was not marital property. It is not half his. If his stance is that he knows Sonny has this money available to him so therefore he is going to decrease the amount he's willing to pay proportionally, there's probably nothing you (or Sonny) can do about it. Personally, I have no problem with parents expecting kids to contribute towards their own education, but, imo, if ex promised him half the cost of his undergrad and he tries to pay less based on these bonds, he's going back on his word.


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RE: Legal / Ethical Question

Thanks for the collective good thoughts on this --

After reading all of the responses, I think Quirk nailed it. Grandma gave the money to Sonny to use for his education, and it should be Sonny's to use. Not Mom's. Not Dad's. But it was also intended to be used for education, not a down-payment on a house, to buy a car, or to live 'well' while at college -- so not for entirely 'discretionary' uses, even though it might be Sonny's legal right to do just that.

So it seems to me that the most fair and reasonable use of that money would be for Sonny to use it to reduce any funds he would need to borrow to finance his education -- and that would be Grad school, since Ex and I did plan on and promise him a 4-year degree. (Or worst case, Year 4 if my college fund money runs out and Sonny doesn't find himself grad school bound.)


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RE: Legal / Ethical Question

When grandma made the gift, he was still OUR son..Why not take the gift, pay first year tuition, and split the remaining 3 years 50/50?


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RE: Legal / Ethical Question

I would tell x that money your family contributes goes towards your half of the expenses. Tell him that he is more than welcome to have his family help contribute towards his half.

If you think that will be a huge issue(and you have the money to help with 4 years) then split a 4 year college 50/50 with him and let the money from grandma go towards medical school.


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RE: Legal / Ethical Question

It seems to me that if dad treats his family's money as coming from him, so should mom. Whether she can get it to stick, dont know, but she should try.


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RE: Legal / Ethical Question

Maybe I'm missing something, but this seems rather simple. The bonds from your Grandmother were for the benefit of your son. These were intended as gifts to HIM for the specific purpose of helping with college. Any educational expenses exceeding the proceeds of the bonds should be paid by you and your X equally, and if there's still isn't enough $$, then Sonny needs to get a part-time job. Maybe going to an "expensive liberal arts college" needs to be rethought. I know your son probably has his hopes pinned on that particular college, but he can probably get an equally good an education at a lesser expensive school.


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RE: Legal / Ethical Question

So its OK for the Dad to treat gifts from his side as his? But not mom? OP should at least give it a shot.


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RE: Legal / Ethical Question

"So its OK for the Dad to treat gifts from his side as his? But not mom? OP should at least give it a shot."

No, it's certainly not OK. And if I were dealing with a fair and rational person who was capable of empathy -- not sympathy or emotional support, but empathy - understanding how another person feels and placing some valid weight on that person's feelings -- Well, then it would be simple and I wouldn't have to ask this question... But Ex isn't rational when it goes against his self-interest, and he does not appear to be capable of empathy. Seriously - simply not capable of it. So yes, insisting on treating these bonds as 'my side' contributions would cause a HUGE issue.

As to which college, that's a whole 'nother thorny spot! Acceptances have been given out, and decisions were made -- but then Sonny got word from his top two choices offering options he didn't have before (transfer option and wait list converted to acceptance). Now the whole decision has to be revisited...


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RE: Legal / Ethical Question

Ummmmm... wow. Is there a date on the bonds that you have to give them to him at a certain time? If not, I'd wait and keep them to one side. Dad and Mom pay 50/50 for as long as they can afford. Sonny takes out educational loans personally for any remainder. They are usually payable upon graduation. Once Sonny graduates, the bonds are A) used to pay back any loans he may have incurred or B) used to help fund grad school.

If at all possible they should not be counted against anyone's "share". They are his, but you should keep them from him as long as possible.

While it is very nice that you want to pay for his education, plans change. I know that I personally would not have graduated Summa Cum Laude had I not been paying every cent myself. Had daddy paid, as he originally said he would, I would have partied a lot more and been content with B's and C's. So... there is something to be said for knowing the cost of one's education.

I think Gerina has the right idea. Legally, they are your son's. Using them for your share may be legal, but if your ex ever told your son about them it could make him feel awkward and put in the middle. Ethically, I think it is reasonable for you to use them as your side because it came from your side of the family. But, I don't think it is wise.


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RE: Legal / Ethical Question

I really like Dotz suggestion. Pay for the first year with the bonds and then split the other 3 50/50. Seems fair and beneficial for all involved.


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RE: Legal / Ethical Question

Its unfortunate the way this has played out. But Ashely -- how is this fair when dad's family contributes money and that is considered from Dad.

As to children paying for college, some SMs come up with every rationalization under the sun why kids should pay. it is somewhat self-serving. Plenty of kids get As when their parents pay.


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RE: Legal / Ethical Question

I don't usually post here but thought I would add my two cents. Regardless of whether or not you use the bonds toward your half, don't save them for grad or medical school. Tons of graduate programs usually get paid for, especially from big universities who have their grad students teaching 101 courses. Most people I know who go to major universities for grad school not only get to go for free, but get stipends to help them live off of as well. Your son may very well change his mind about grad school or medical by the time he receives his undergrad degree. My plan was to go straight to grad school from undergrad and by the time I graduated, I was sick of school. Or he may not go back to grad school until he is much older, maybe he'll meet a girl and decide to have a family first instead, you never know. I think it would be fair to pay for the first year of school with the bonds and then split 50/50 after that...that will give you another year to prepare for helping as well. It probably is unfair, but not sure if it would be worth the fight.


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RE: Legal / Ethical Question

KKNY, Grandma stipulated it was to be used for Sonnys education...How petty is it to say SMs rationize kids should pay...GRANDMA said this is for Sonnys education..And it should be spent on that regardless of divorced parents squabble over my family, your family gave it Geez..


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RE: Legal / Ethical Question

MBA, law school and Med Schools are NOT subsidized.

Its interesting how many people here say the bonds should in effect be split 50-50. I wonder if it would be different if it were bonds given by the DADs parents. Actually I dont wonder.


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RE: Legal / Ethical Question

Yes, but DAD says when his family gives money -- it counts as his alone. Seems pretty one-sided to me. Of course it should be spent on Sonnys education -- but it should count as moms share if Dad counts everything his family gives as from his share.


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RE: Legal / Ethical Question

Interesting discussion --

For all I know, bonds MAY have been given by Dad's side --
I certainly wouldn't know...


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Whose family is it really?

Sounds to me like DAD would say, oh my family gave to ME and then I gave to Sonny -- YOUR family gave to Sonny. My response -- the intent is pretty clear.

fyi, my Xs family gave money to my D, and I have always counted as from "him"


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RE: Legal / Ethical Question

kk, it wouldn't matter if the mailman gave him the bonds... the bonds belong to the kid. Just because dad has claimed what his family gives is on dad's behalf does not justify it. The truth is then, that dad did not contribute.. his family did. Why should he get any credit for what someone else does? family or not.

Sweeby, if you think it's right for your ex to claim the stuff his family contributes as the same as him contributing, then count it on your family side. If you think he was wrong to do that, then it is wrong for you to do it now... it's that simple. Two wrongs don't make it right.


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Paying for college

Somehow -- the SMs here always support Dad not paying for college. What a shock. Children of divorced families do have lesser college attendance and graduation rates than children of intact families.

Sweeby, I suggest you at least tee it up with dad that both of you treat family gifts as from that parent, and divide up residual based on relative income. The worst he can say is no. But push back. Is your state one which will require divorced parents to pay for college or CS after age 18?

As much as some of the SMs here say -- oh Dads agree to anything out of guilt -- males are statistically better at negotation and moms statitiscally have less income after divorce.

Give it your best shot.

Good luck


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RE: Legal / Ethical Question

KKNY, Where did dad not paying for college even come up here? I missed it...I was putting myself in place of divorced bio parent, never even thought of this question in step mode, not relevant..If my ex MIL gave my son bonds for college thats where they would go, and then like you said Ex and I should work out the details of the remaining tuition. Count me out of the crew of SMs that dont want DH to pay for college.The only way SS is going to get there is if DH does it, since Ex BM has zero income and he is supporting both her and her jobless homeless live in bum...On child support....


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What is the question?

The question that OP raised is NOT whether the bonds should be used for college, but how the remaining costs should be paid for -- ie do the bonds count as mom's contribution (which most people here say no) or neutral. By saying the bonds should not be regarded as mom's contribution to college expenses, yes it will reduce dad's expense.


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RE: Legal / Ethical Question

kk, it didn't matter to me one way or the other WHICH grandparent bought the bonds. I wasn't even clear on who bought them when I first posted... it doesn't matter which grandparent got them, they are a gift to the child and they belong to the child. It is NOT mom's contribution, it is grandparent's contribution. Mom and Dad agreed to share the cost of education 50/50. Both will benefit from grandparent's or anyone else contributing.


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RE: Legal / Ethical Question

That is your opinion -- I have said mine. When dad wants to counts his family's contributions as his, so shoudl mom. And 50/50 split should only be if dad and mom earn the same, imo. We'll just have to agree to diaagree on this one.


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RE: Legal / Ethical Question

Why, exactly, does everyone keep saying the money belongs to son, therefore, it should be used equally towards each parent's contribution? If the money is truly his, then shouldn't it be his in addition to the parents' contributions? Otherwise, it's a defacto gift to sweeby and her ex, not Sonny. It was given to Sonny, not his parents.

I think silversword's approach is the right one. Certainly, even if parents promised him full four-year degree, if the stock market ate too much of his college fund for that to be possible, it's reasonable for him to use it to minimize student loans he might otherwise have to take out. Or grad school if sweeby and ex can pull off fully funding the undergrad. But it seems unfair (to me) to use HIS money to pay for things that his parents would be otherwise paying for. ((again, as I said before, i personally have no problem expecting kids to contribute to their own education, but if so, it should be clear that's what it is... HIS money, that HE is expected to contribute, not a gift from family which helps his parents afford what they've already agreed to spend).


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RE: Legal / Ethical Question

I would take the total of what college is going to cost approximatelly, subtract the bonds, then divide remaining balance between two parents. If bonds are counted towards tuition then parents will have less to pay anyways. So everyone wins.

Or you and Ex pay tuition and bonds go towards books, room and board etc.

Also if money is tight (and savings are lost), why sending him to private college? Plenty of great public universities out there. Unless we are talking Harvard here.


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RE: Legal / Ethical Question

'Tight' is relative of course --
And yes, we're talking Ivy (Go DS!)


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No, FD, everyone doesnt win. If BOTH parents put grandparent funding into the pot, and then divide, that is ereryone winning.

Congrats to DS Sweeby.


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congrats

I see sweeby, if it is Ivy League then yes it makes a difference, stick to a decision. I am impressed!


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kkny

kkny maybe dad plans on bringing his family contribution to the pot too? I don't know.

I don't think grandparents' contribution has anything to do wiht parental contribution.

For example if my X's parents gave anything to DD, it didn't mean that X could subtract it from CS. One thing has nothing to do with the other. I am not sure what i would do and what is right. I see your point too.


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RE: Legal / Ethical Question

Well, realistically, anything that came/comes from Dad's side will probably be in smaller amounts given directly to DS, since 'college funds' are not their style. So that's probably a moot point...

After reading all of the varying viewpoints, I have concluded that these bonds are DS's, but agree with the line of thinking that he should use them towards his own education. If I knew for sure that grad school was on the horizon, then I'd probably tip off DS that the bonds are HIS and that he might want to reserve them to use for the portion of his education that we haven't promised to pay for. But on the other hand, if he doesn't continue on to grad school, and DS still has the bonds intact when he graduates (or worse, fails to!) -- then I would feel like the funds had been misused. I feel he is honor-bound to apply those funds toward his education...

And yeah, I'm pretty proud of him!
This is the kid who's mildly dyslexic, but also (clearly) very bright.


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My guess is most ivy grads go to some form of professional or grad school. The former more likely.


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RE: Legal / Ethical Question

O M G! -

I just got off the phone with Ex and SM, and Ex indicated that he considered the bonds to be part of my contribution! Will wonders never cease?


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RE: Legal / Ethical Question

Hmmmm, Sweeby? I think you might want to go buy a lottery ticket today. Miracles seem to be happening to you!! :-)

PS - many congrats on your son's accomplishments . . . they are yours as well.


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RE: Legal / Ethical Question

Everything is coming up roses today.


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Tomorrow

PS Tomorrow being the deadline for regular decision applicants (as opposed to early decision) to reply as to which college they are going to, it is a tradition at my daughters HS to wear the Tshirt of the school they are going to.


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RE: Legal / Ethical Question

KK, is your daughter a senior this year?

My HS had that tradition as well, how funny! :)


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RE: Legal / Ethical Question

I've heard rumblings of that tradition at DS's school, but he didn't know of any dates. Fortunately, he's prepared!

Now I'm off for that lottery ticket ;-)


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RE: Legal / Ethical Question

sweeby congrats on bonds issue resolved. how nice of EX!

never heard of such tradition wiht T-shirts. my DD's school didn't have that, sounds fun. DD applied to 6 schools and got accepted to 5(6th one was the best choice but they wanted her to write some additional essay and she didn't bother, yeah typical). I cannot believe she finished her 2nd year already.

KKNY not to hijack but do you know where DD will go? congrats on her graduation


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Yes, she was accepted at her first choice, early decision.


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congratulations to kkny's dd

Congratulations to your DD KKNY. Will she be close to home? And are you happy with the school?


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RE: Legal / Ethical Question

sweeby, I just want to say how happy I am for your son as well as your Ex's decision.


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Congratulations, KKNY and Sweeby! I know that it has got to be an almost euphoric feeling when your kids do so well!

It's funny because we, as parents, believe in our kids and know what they can do, but they may not believe in themselves enough. I know with my DS (10yo), he'll do so-so on homework and then ACE the tests. He feels so good about himself that he accomplished something. But I knew he could do it; HE needed to know he could.


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Sweeby, she will be about a 5 hour drive at a suburb small school in a quientessinal college town. She is happy so I am happy.


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RE: Legal / Ethical Question

It belongs to the child to go to college. If he decided not to go, it would still be his. If you are talking about savings bonds, they should have had his name on them. My children had bonds in their names. Legally the bonds belong to whoevers name is on them. Not morally right but legally so.


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