Wealth Insights is our regular financial planning update, generally refreshed on Thursdays. Wealth Insights provides perspective on financial planning topics to help as you consider options for navigating your financial life.
There are five estate planning documents you may need, regardless of your age, health or wealth:
A custodial account is an account established at a financial institution for the benefit of a minor child and managed by the parent or another designated custodian. A custodial account is established under a particular state’s Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA).
All contributions to 529 plans are considered present interest gifts. So, in general, the value of a 529 plan is included in the estate of the designated beneficiary.
529 plans can be a great way to save for college, but they’re not the only way. When you’re investing for a major goal like education, it makes sense to be familiar with all of your options.
Direct payment of tuition to an educational institution is not considered a taxable gift. Therefore, you’re able to “give away” more than $19,000 per year (the annual federal gift tax exclusion) for your grandchild’s college education and not worry about gift taxes. However, colleges may reduce a student’s institutional financial aid by the amount of your payment. So before sending a check, ask the college how it will affect your grandchild’s eligibility for college-based aid.
Looking for a tax-advantaged college savings vehicle that has no age restrictions and no income phaseout limits — and one you can use to pay for more than just tuition? Consider 529 savings plans, a popular way to save for higher-education expenses.
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