The Not-So-Odd Couple: 529 Savings Accounts & Your Estate Plan

 In Estate Planning

specialized documents family estate planningWhether you have one child, or seven children, you’ve likely thought about that future day when the ever-rising college tuition bills will come knocking at your door.  Maybe that day is going to begin for you this month.  There are a lot of eager high school graduates readying for their first college semester to begin.

Having a 529 Plan in place is a great start – in fact, you’re in the minority if you’ve taken that initiative.  Just three years ago, a study by the Government Accountability Office found that of the 25 percent of American families expecting education expenses in the next five to ten years, only seven percent of them had a 529 Plan.

Nonetheless, if you have not factored your 529 Plan into your estate planning, you are missing a crucial step in ensuring the proper execution of your goals.  You want to make sure that the money you are investing today will be effective in helping your child achieve his/her educational pursuits – and under the terms you’ve set.  Have you planned for how this account will be handled if you became incapacitated or worse?  If not, it’s time to seal-the-deal by naming a primary and secondary successor custodian for your 529 Plan.

Naming successor custodians is not something to be taken lightly.  Here’s why: A successor will oversee distribution of the 529 funds and take on all the rights of an account holder.  These rights will enable the individual to control investment decisions and disbursement guidelines.  Most importantly, a successor can change the beneficiary.

Obvious choices for a successor custodian will often be your spouse, followed by other family members.  Your child’s grandparents, aunts, and uncles would likely be considered.  However, you are not limited to family; the most important factor is that the individuals you choose are people that you trust will look out for your child’s best interests and honor your desires for how the account should be handled.

Do nothing?  Then you hand the reigns over to a court to decide who will control disbursements to your child until he/she is a legal adult.  Are you confident that your child’s interests will be best protected this way?

For more information, schedule a visit at our office to discuss your personalized Estate Plan.

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