As the cost of higher education continues to rise, many parents are worried about whether or not their children will be able to afford to attend college or other advanced school. If you are interested in helping your children, grandchildren or other loved ones with paying for college, you may want to consider using a 529 plan as part of your estate planning efforts. A 529 plan gets its name from Section 529 of the Internal Revenue Code, which established the education plans in 1996.
A 529 Plan is a savings plan created solely for the purpose of funding an individual’s education. These plans are operated by state or educational institutions. A 529 Plan allows your family to make donations throughout the child’s life to assist with saving for future expenses related to their education.
Each state offers at least one type of 529 plan, each with its own benefits. Thus, it is important to confer with your estate planning attorney to discuss which plan best fits your needs. You do not have to choose the 529 savings plan offered by the state where you reside. You can choose any plan and the money saved in it can be used to pay for any qualified educational institution across the country. The state where your 529 plan was created does not impact where you must attend college.
To learn more about the tax benefits of establishing a 529 plan, please read our blog titled “Do 529 Plans have Tax benefits?”
Finally, it should be noted that some people prefer to use an irrevocable trust for education because of the flexibility a trust provides and the ability to control the funds while serving as the trustee. If you are trying to decide whether a 529 or an irrevocable trust would be more beneficial for you and your loved ones, call us today.
The Astill Law Office has provided high quality legal services for over 30 years. We specialize in wills, trusts, estate planning, and asset protection. If you have any questions about creating a Trust, Will, or estate planning in general, contact The Astill Law Office at 801-438-8698.