Grandparents are used to giving children money that goes into a savings account in the child's name, says Clare Levison, a certified public accountant and author of "Frugal Isn't Cheap."
But if the grandparent opens a 529 plan on behalf of the child, the grandparent always retains control of how the account is used. If grandparents send money to a 529 plan account opened by their own children, the grandchild doesn't have control either.
In both cases, there is an adult owner, and the child is listed as the beneficiary. They are authorized to use the funds but the owner has to authorize payments.
Trying to save for college? Get tips and more in the U.S. News College Savings 101 center.