The value of education cannot be overstated, and when you are contemplating your legacy you may ask yourself how you can help your younger family members with college expenses. There are various options, and the one that we would like to highlight here is the 529 plan.
These plans provide you with the opportunity to set aside financial resources to be used for the educational expenses of the beneficiary, and this is done with tax advantages built-in. With the 529 savings plan you contribute incrementally over a period of time, and as the assets in the account appreciate your tax responsibility is deferred.
One of the benefits inherent in these accounts is that you can re-assume ownership of the resources and in essence dissolve the account should you choose to do so. At that time you would be responsible for income tax as well as a 10% penalty.
Once the beneficiary starts to use the assets in the account to pay for educational expenses these funds are not considered to be taxable income. And it should also be noted that you are removing resources from your estate for tax purposes when you invest money into a 529 plan and this is part of the appeal of these accounts.
This is just a brief overview of these very popular college savings plans. To get all the details and explore the best way to meet all of your objectives while planning for the future simply take a moment to arrange for a consultation with an experienced, savvy Hartford estate planning lawyer.