Did you know that a 529 Plan may be more than just a college savings plan? It can be a useful asset for estate planning. Let us discuss three benefits to using a 529 plan as an estate planning tool.

  1. Tax-free gifts. A 529 plan allows you to give money to beneficiaries tax-free up to a certain amount. Individuals can gift $15,000 per person per year and couples can gift $30,000 per person per year without implicating a gift tax. There is no limit on how many individuals you can give gifts to, as long as you stay within $11.58 million in your lifetime.
  2. Reducing your taxable estate. The federal government and many states impose a tax on the value of an estate before it is able to be distributed to beneficiaries. While the threshold for the federal estate tax is over $11 million, some state estate taxes are imposed on estates valued at much less. Gifting money through a 529 plan can help reduce the overall value of the estate so that it falls below the relevant estate tax threshold while still giving the money to the beneficiaries.
  3. Retain control. The amount of control you are able to retain over the money put into a 529 plan may make this the most unique estate planning benefit of the 529 Plan.  Although there are a variety of estate planning tools that can be employed to obtain significant tax benefits, most of them do not allow you to retain the type of control over the funds as a 529 plan does. With a 529 plan, you can choose how the money is invested, change the beneficiaries, and even take the money back.

For help creating a comprehensive estate plan, our office is available to assist. Please contact us today to schedule an appointment.