Coverdell ESA Distributions not used for the designated beneficiary

[Hank]

I have a client that closed out a coverdell ESA in 2022 to use for a child's educational expenses that was not the designated beneficiary of the account.  Instead of changing the beneficiary first they just closed out the account so the 1099-Q was reported in the name and social security number of the older child that did not use the funds for educational purposes.  It appears that the designated beneficiary would be responsible for paying the taxes and penalty on the full earnings because they did not spend those funds on their own educational expenses even though the money was spent to a large degree on the educational expenses of their sibling.  I cannot locate any guidance that addresses this particular issue so I just wanted some opinions.  Thanks.