We are calling them Trump accounts and they come to us through the graces of July’s one big beautiful bill. The U.S. is projected to have a $1.75 trillion dollar deficit in a world where we owe our creditors $38 trillion. But Congress decided that because we do need children, we are going to give every one of them born from January 1, 2025 to December 31, 2028 the sum of $1,000 to open a Trump account. It also appears that Michael Dell and his wife are standing by to toss in another $250 of their computer earned money to each of these anticipated accounts.

The practical effect is that taxpayers will borrow money, to then give it away to fund the $1,000 portion. But, so far, its not clear whose money it will be. Therein lies the divorce lawyers dilemma.

Presumably, this is supposed to inspire Americans to have children although anyone today who pays for day care will tell you how fast $1,000 disappears. During this coming year and into the next three, eligible people (we are avoiding the word “families”) can open these accounts and our Treasury will remit the $1,000 once it has decided there is a qualifying child. When established, the account owner (also unclear) can deposit up to $5,000 in the account per year and the owner’s employer can fund it with $2,500. The amount combined is capped at $5K.  The perceived purpose of the account is to encourage savings for post secondary training or eventual retirement. These are all laudable goals were we not borrowing money to fund them. Yet, as many analysts look at the landscape of this new asset, there are lots of problems associated with otherwise “free” money.

Now the problems. The account must be invested in “certain” mutual funds or exchange traded equivalents. Those funds are not allowed to charge more than 0.01% for management. That appears to be about ¼ the going rate for index funds sold today. So, one wonders how many investment houses are looking to manage assets on so thin a fee. The Treasury Department suggests the rules regarding withdrawal will echo those of individual retirement accounts (IRAs). No money can be taken before the child is age 18 and after that any withdrawal is taxed as ordinary income with a 10% penalty tacked on. If the participant holds it to age 59 ½, the penalty goes away.

Final regulations are pending. But, who owns the account while the child is a minor? And can each parent open an account or is there a limit of one per child? Minors can’t have accounts in their own names. Does that make this like a Uniform Gift/Transfer account where the parent is effectively a trustee. Or is it like a 529 Account which belongs to the parent until deployed for the use of the child? 529 Accounts are marital assets in Pennsylvania. UTMA accounts are not.

The more we read about these accounts, the stranger they become. If you don’t set up an account like this, the Secretary of Treasury may elect to make one for your child. Mr. Bessent already seems busy but imagine having to bring his real ID to thousands of meetings to open accounts on behalf of children he doesn’t even know. As we all know, opening a bank account since 2001 has been something of an ordeal. Then we have the crazy exceptions to the no distribution rules. You may be able to get to this money if there is a nearby natural disaster, if you want to start a business, buy a house or adopt a kid. Who is going to decide on those distributions and who, in government, is monitoring these decisions for lawfulness?

As we sit here today, all we have is the text from our most recent “big beautiful bill”

and this release from last week. Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations | Internal Revenue Service The promised regulations will undoubtedly take some time because the IRS has been downsized and then shut down this Fall, although politicians will want fast action so they can tell constituents about this “gift.”  Suffice to say, encouraging population growth and savings for future life-events are inherently good things but borrowing from taxpayers to gift it to others does not sound like an intelligent approach to reaching the goal. For lawyers, it promises to be another “small change” account to fight about in divorce. That presumes we will find out whether such accounts exist in our cases.