Create a Legacy for Your Grandchildren


Filed under: Retirement


Back view of grandfather and grandchild walking in a nature path

People often say that grandchildren are one of the greatest joys in life. You get to enjoy spoiling them, while the parents do most of the hard work! Of course, what we really mean by “spoiling” is that grandparents are often in the ideal position to provide the children with advantageous opportunities. You would probably rather gift your grandchildren with a college education, than simply purchase every video game on the market. And that would be a smart decision, because a college education will benefit your grandchildren for the rest of their lives.

According to a study by Fidelity Investments, 53 percent of grandparents are saving for, or currently financing, a grandchild’s college tuition.

If you want to give the gift that keeps giving for the rest of your grandchildren’s lives, do some research on your different options. There is more than one way to save for college tuition, with some savings plans providing different benefits from others. The plan you choose will depend upon your financial situation as well as that of the child’s parents.

For many grandparents, the 529 college savings plan is the best choice, for several reasons:

  • You can lower the value of your taxable estate
  • Your grandchild can take withdrawals from the account to cover tuition, books, fees, supplies, and other approved higher education expenses, free of income taxes
  • You are in control of withdrawals from a 529 savings account. You decide withdrawal amounts.
  • If you ever need to, you can simply change the beneficiary of the account. You might want to do this if one grandchild receives a full scholarship, and you need to use the money for another grandchild.
  • The money in the fund can be invested in a variety of ways, according to your preferences.
  • You can avoid the federal gift tax by making contributions of up to $70,000 to a 529 college savings plan. Talk to your tax accountant about this maneuver.

A 529 college savings plan is not counted as an asset when students apply for financial aid. But once disbursements begin, they can be counted as income. So if these disbursements are large, they may disqualify the student from receiving any federal or state financial aid. Consider these issues carefully when you grandchild is comparing offers from different schools regarding tuition, scholarships, and financial aid packages.

If a 529 college savings plan sounds like the type of gift you would like to bestow upon your grandchildren, talk to your financial advisor about your questions and concerns.

14636 – 2015/6/30



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This information has been provided by a licensed insurance professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting the insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax, trust and estate, or investment advice. Infinite Wealth Advisors is not an investment advisory firm.  Investment Advisory Services provided by NAMCOA® – Naples Asset Management Company®, LLC, a federally registered investment advisor, website: www.NAMCOA.com .