Are you considering gifting money for your grandchildren’s education? Any contribution to a 529 account is legally considered a gift to the account beneficiary – in this case, your grandchild. In 2021, annual contributions of $15,000 or less are excluded from gift taxes. If part of your estate plan is to reduce your estate and provide for your grandchildren’s education, you can make yearly contributions to max out the gift tax exclusion. In 2021, you can contribute up to $15,000 for each beneficiary or $30,000 per married couple to a 529 plan without having to pay gift taxes.
A 529 plan is a college savings and investment account that offers tax benefits when used to pay for qualified education expenses for a designated beneficiary.
Some key features of a 529 plan are:
• It’s not just for teens. Anyone at any age who has a Social Security or Tax ID number can be a beneficiary of a 529 plan. So you could make a gift to an adult who wants to go back to school to change careers, for example.
• You can open a 529 account for someone, or you can contribute to an already existing plan.
• You can contribute up to $75,000 ( or $150,000 per married couple) per beneficiary in a single year without eating into your lifetime gift-tax exclusion.
• If you open and own a 529 account for your grandchild’s education, you can retain ownership and control of the funds until they are withdrawn to pay educational expenses.
Your estate planning goals may change over time. Make sure that your estate planning legal documents reflect your current wishes and strategically account for federal and state tax exemptions so that your beneficiaries and heirs are protected.
There are many benefits to reviewing your estate plan at the end of the year in addition to gifting and gift taxes. Your estate plan may need to be updated if your family circumstances have changed significantly, such as a birth, death, wedding, divorce or relocation to another state. An experienced estate planning attorney can help you provide for and protect your loved ones in the new year, and beyond.
Gifting contributions to a 529 plan to provide for your grandchildren’s education is an investment in their future. Do you have questions about gift taxes and estate planning? Our experienced estate planning lawyers in Lombard, Illinois can advise you on the best options to protect your assets and loved ones. To talk to an estate planning attorney contact the Estate & Probate Legal Group at 630-864-5835.
We provide legal services in Cook, DuPage, Kane, Lake, and Will counties.