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Question for estate planning guru regards CESA strategy

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This is for the estate planning gurus lurking and making awesome contributions on this site. Yes, we all know you only provide legal information, not advice.

I set up a self directed CESA account (coverdell) with a custodian. I then set up an LLC that has only 2 members AT THE TIME OF FORMATION: the CESA account and an operating company already in existence which I am the CEO of.

When I went to fund a checking account in the name of that newly formed LLC, the custodian said it was a prohibited transaction due to the fact that I owned and controlled the operating company and that I was the manager of the new LLC (unpaid manager).

I have read in many forums that this IS done since it IS permissble under the current IRC in that AT THE TIME of formation, both entities have to exist and cannot be added later. However, the custodian's legal dept has not accepted it.

What specific IRCs can I use to explain to them this IS a valid setup?

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