Is a 529 College Savings Plan Right for Your Estate Plan?

Nov 23, 2012

For taxpayers who are concerned about transferring wealth without incurring gift or estate taxes, one estate planning tool that is worth considering is the 529 college savings plan. Although 529 savings plans have been available since the 1990s, they have been under-utilized for a variety of reasons. Now may be the time to consider incorporating one or more of these plans into your estate plan.
 
The details of a 529 college savings plan may vary somewhat depending on the plan; however, the concept remains the same from one plan to another. You can transfer as much as $350,000 in money or assets into a 529 plan to be used by the beneficiary for college tuition and related expenses. You may create more than one 529 plan if you have more than one beneficiary whom you wish to assist with college expenses.
 
Unlike some other investment options, you retain a significant degree of control over the assets in a 529 plan. In fact, you are able to withdraw the funds if you need them at a later point in time and/or change the beneficiary if the original beneficiary does not use all of the funds held by the plan.
 
In the past these plans were somewhat difficult to set up and manage which may be why they were under-utilized. Today, they are easier than ever to create and administer. Be sure to talk to your estate planning attorney and financial advisor if you think that a 529 college savings plan may be right for you.

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