The vast majority of people believe that a college education
is important, but only a small minority of people are adequately saving for the
ever growing costs of their children’s education. While college education is definitely not the
only path to future financial success, it is a proven head start that should
not be ignored. Over the past couple
decades, Congress and state governments have shifted their priority from
subsidizing higher education costs via grants and direct institution support to
tax incentives for individuals.
Therefore, if an individual does not adequately plan to take
advantage of tax incentives offered via 529 plans, then the net cost of college
will increase at an even faster rate than the current average 5% increase. 529 plans allow parents/grandparents to more
efficiently save for college expenses in a tax favorable environment without
income-based limitations that are found in most tax laws. In addition to tax advantages, 529 plans also
provide asset protection from creditors in many states (including Pennsylvania).
As an estate planning attorney, it is my goal to help my
clients identify and solve various problems.
One of the largest problems that my clients face is the lack of planning
to ensure that there will be sufficient resources to pay for their children or
grandchildren’s college expenses. Along
with your other trusted advisors (e.g., financial advisor, CPA, life insurance
professional), I can assist you with developing a coordinated plan to save for the
costs of your children or grandchildren’s higher education while balancing
higher priority planning for every day expenses and retirement. When developing your plan, we will discuss
issues like 529 beneficiary designations, 529 federal and state tax incentives,
and asset protection.
Additionally, if you are a grandparent with a legacy goal of
assisting your grandchildren with the cost of higher education, there is no
better estate planning tool for providing money for education expenses while minimizing
taxation of your estate. 529 plans allow grandparents to instantly move
large sums of money out of their taxable estate (e.g., currently $70,000 per
beneficiary) while having the unique ability to pull the money back in case of
a financial emergency. I am unaware of
any other estate planning tool that offers the remarkable ability to remove
money from your taxable estate and have easy access to get the money back if
absolutely needed.
If you would like to learn more about planning for higher
education costs with the tax incentives and asset protection offered via 529
plans, then call my office to set up an estate planning consultation.