If the social security number that appears in the box labeled "Recipient's TIN" on the 1099-Q is that of child 1, then child 1 is the only person the funds can be used for tax free. That's because since child 1's SSN is on the 1099-Q, then child 1 is the only one who will report that 1099-Q on their own tax return, *IF* they are required to file a tax return.
If the social security number that appears in that box is one of the parent's, then the funds can be used for the qualified expenses of any child who qualifies as their dependent, provided they claim that child as their dependent.
