One thing many grandparents wonder is what they can do to help their grandchildren excel academically to give them the best chance for success. As such, looking into what options are available to help them pay for their grandchild’s education expenses when estate planning is essential. If this reflects your situation, you’ll want to keep reading. The following blog explores what standard choices there are and the benefits and drawbacks of each option. You’ll also discover how a Medina, Ohio estate planning lawyer can help you make the best decision for your family.
What Estate Planning Options Do I Have to Fund My Grandchild’s Education?
One of the most common options that many will invest in when interested in covering college or university expenses for their grandchild is a state-sponsored 529 plan. This allows you to invest funds for someone’s college education without incurring tax consequences. However, there are limitations to this plan. Unfortunately, it can be easy to trigger tax penalties, and there are restrictions on how these funds can be used.
Another option some opt for is to hold the funds in a Will. However, this poses some issues. If you do not pass before your grandchild attends college, they will not be able to access the funds unless you amend the Will and remove the assets. Also, you must clearly specify how the funds will be used. When you pass away, gifts in Wills become the sole property of the Beneficiary for them to use as they please, unless a condition has been specified.
One plan many are utilizing is establishing an Irrevocable Trust. Not only does this allow you to front-load five years’ worth of annual exclusions into the Fund, but it also allows you to avoid the gift tax. When the Trustee of the Fund makes a qualified transfer to the college or university, it will not count toward the annual exclusion. Also, placing funds in a Trust allows more flexibility when it comes to how the funds are spent. If your grandchild has an emergency, the Trustee can help transfer money from the Fund to help cover unexpected expenses.
How Can an Estate Planning Attorney Assist Me During This Process?
As you can see, there are many options available when planning to help fund your grandchild’s academic journey. It’s in your best interest to work with an experienced estate planning attorney to help you understand all your options before making a decision. This helps ensure you feel confident in making the right choice for you and your family.
At Krause Law, we understand how important family is. That’s why our team is dedicated to helping you do everything you can to provide for your loved ones. Contact us today to learn how our firm can assist you during this complex process.
