Estate plans are about more than passing along assets at death. These plans are often composed of an array of legal tools that are designed to help ensure future financial security in any number of situations. Trusts can help ensure assets are passed smoothly while generally avoiding the court process referred to as probate as well as provide guidance in the event you are seriously injured and unable to express your wishes for how finances or medical care should be handled while business succession plans can be developed to help transition business ownership during retirement.
Another option to consider as part of an overall plan is a 529.
What is a 529? A 529 is an account that is geared for putting money aside to fund future educational expenses. These accounts are popular amongst parents saving up for children's college costs.
Why should I use a 529? These accounts are similar to savings accounts, in that they are used to set money aside to grow with interest. As long as the money is used toward college expenses, the money grows tax-free.
Which plan is right for me? Every state has its own 529 plan. Parents can choose a 529 savings plan from any state; they are not limited to their home state. A decision should include consideration of each plan's fees and profits.
Some states, like Illinois, generally offer additional tax deductions or credits as incentive for investing within a home state's plan.
It is also important to note that it is not uncommon to hesitate to start one of these accounts for fear of not using the assets. As noted in a recent piece in the Washington Post, many of these plans also offer rollover options. This provides peace of mind for those who are concerned they may not need the plan for the titled beneficiary's educational expenses. This option allows the assets within the account to roll over to another 529 account. Thus, if one child goes to school and the other does not, the assets could potentially get rolled over to the attending child's account so the assets do not go to waste.
What else should I have in my estate plan? A 529 is a small portion of an estate plan. Estate plans can be simple or complex depending on the wishes of the creator. Regardless of the level of complexity, each plan should be specifically tailored to meet your needs. Contact an experienced attorney to help ensure that your needs are reflected within your plan.