Taking care of those that you love can involve providing them opportunities to reach their full potential as human beings. With this in mind many people want to provide resources to pay for the college education of a loved one (or multiple family members). One way of doing this is by contributing into a 529 plan.
These plans are offered by the states and in some states you can prepay the tuition of a student who will be entering college in the future. By doing this you are guaranteed the tuition rate that you agree to when you created the account regardless of how expensive tuition is when the student enters college.
The other type of plan that is more widely offered is the savings plan. You simply make contributions into the 529 over a number of years and they are invested in an effort to gain appreciation. This appreciation is not taxable unless you were to dissolve the account and take back ownership of the resources.
Once the student does start to utilize the assets that are in the account to pay for educational expenses these distributions are not considered to be taxable income. Another advantage from a tax perspective is the fact that the resources that you placed into the 529 account are not counted as part of your estate for tax purposes.
To learn more about 529 plans and other ways to put aside money for the education of an heir simply take a moment to arrange for a consultation with a licensed and experienced South Carolina estate planning lawyer.
Kuhn & Kuhn Law Firm is a member of the American Academy of Estate Planning Attorneys.