A 529 Plan, named after Section 529 of the Internal Revenue Code, is a tax-advantaged savings plan that can be used to pay for qualified education expenses, as defined by the Internal Revenue Code. Although traditionally thought of as simply a college savings plan, did you know these plans can also be used to pay for expenses like room and board, books and computers, and even elementary and high school education expenses? There are also important estate planning benefits available through the use of a 529 Plan, making it an even more appealing tool.  

One of the estate planning benefits to a 529 Plan can be the amount of control that you are permitted to retain over the funds contributed to the plan. You can choose from a variety of plans. You can switch beneficiaries. Additionally, you can even withdraw the money from the plan altogether. This level of control that you retain over the funds, even though the money contributed is immediately removed from your taxable estate, is a benefit rarely found in any other estate planning vehicle. 

There are also potential estate planning tax benefits to a 529 Plan. For individuals who believe their estate will be subject to estate taxes, one of the appealing estate planning benefits to a 529 Plan may be that amounts contributed to the plan are removed from the taxable estate.  Individuals can gift $15,000 per person per year and couples can gift $30,000 per person per year without implicating a gift tax. Other than the lifetime gift tax exemption limit, which currently exceeds $11 million, you are not limited in the amount of tax-free gifts you can give. You can even “superfund” a 529 Plan by frontloading five years’ worth of contributions in one year.  Superfunding is an excellent way to simultaneously reduce the value of your estate and jumpstart a beneficiary’s education fund.  

For all of your estate planning needs, our office is here to help. Together, we have over 40 years of trusted experience right here in Florida, and nationwide. Contact us on our website or by calling us at 850-386-2171 today.