The Section 529, Education Savings Plan, is a relatively new estate planning device for funding the college education expenses of family members. Recent changes in the tax laws have provided enhanced income tax incentives for their use, which are in addition to estate and gift tax savings. Such plans offer a great degree of flexibility, except for the investment selections, for both the transferor and the plan beneficiary.
A Section 529 Education Savings Plan is sponsored by a particular state for individuals to save and invest for a child’s future qualified, higher-education expenses. Beginning in 2003, eligible educational institutions could establish such plans as well as the states. Currently, all of the 50 states and the District of Columbia have established such plans, each with different terms, conditions, costs, limitations and benefits. There are two types of plans, prepaid tuition plans and qualified savings plans. The following discussion is limited to qualified savings
