As the rise of Artificial Intelligence rapidly reshapes the employment landscape, educational institutions of all kinds are sprinting to respond with next wave learning experiences and “future proof” skill building opportunities. Though much is uncertain, this much is clear: the rising generation needs support preparing for new ways and types of work. That means now is the right time for families to figure out how to finance the next wave of education for the young.
Opening Doors: A 529 Plan and A Trust?
Saving for education is a major goal for many families. Whether interests lie in vocational training, programming languages, data management, cybersecurity, or more broadly around critical thinking, relationship and collaboration skills, or entrepreneurship, education continues to play a major role in ensuring solid career paths for the next gen. That’s why estate planning professionals are reminding families to take the integration of educational goals into plans for passing assets forward ever more seriously. To jump start thinking about educational goals and estate plans, the law office of Davis Schilken in Colorado points out:
- One of the most meaningful gifts you can leave behind is the gift of education. With rising tuition costs and mounting student loan debt, an inheritance earmarked for education can be a life-changing legacy for your loved ones. Beyond simply covering expenses, your support can open doors to opportunity, growth, and security for future generations.
- Thoughtfully structuring your estate to include educational support shows your loved ones that you believe in their potential. Whether through trusts, direct gifts, or education-specific accounts, working with an estate planning professional ensures that your intentions are clear, tax-efficient, and legally sound.
- Establishing or contributing to a 529 savings plan is a tax-advantaged way to support a child or grandchild’s education. These funds can be used for tuition, books, room and board, and even certain K-12 expenses. With careful planning, you can set up a legacy that grows over time and benefits multiple generations.
As attorneys at Adler, Pollock & Sheehan further explain: “529 plans are state-sponsored investment accounts that permit parents, grandparents or other family members to make substantial cash contributions (up to $400,000 or more, depending on the plan). Contributions are nondeductible, but the funds grow tax-free and earnings may be withdrawn tax-free for federal income tax purposes (plus state tax breaks in some cases) provided they’re used for qualified education expenses.” For many families, creating a family education trust to hold one or more 529 plans proves to be an excellent vehicle for saving and safeguarding funds earmarked for education, since a trust:
- Permits you to maintain tax-advantaged education funds indefinitely (depending on applicable state law) to benefit future generations and it keeps the funds out of the hands of those who would use them for other purposes.
- Allows you to establish guidelines on which family members are eligible for educational assistance and direct how the funds will be used or distributed in the event they’re no longer needed for educational purposes. You can also appoint trustees and successor trustees to oversee the trust.
- Can accept noncash contributions and hold a variety of investments and assets outside 529 plans. For example, the trustees might invest in hedge funds, private equity funds, life insurance or other alternative investments if they conclude that the increased returns would outweigh the tax cost.
Keep in mind that when you work with a lawyer to establish a trust, you will designate one or more trustees to administer it. Trustees have fiduciary obligations and are held to exceptionally high legal standards, “the most important of which are the duties of loyalty and care, and the duty to act in accordance with the terms of the trust agreement.” Given the seriousness of the role, trustee bonds are often required. Essentially, a trustee bond is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain trustee bonds: Just get a quote online, fill out the information, and enter a payment method. Then, simply print or e-file the bond from anywhere.
Trust and Estate Law Practice?
Speed things up whenever and wherever a bond is needed. Just log in to The Partnership Account® for Attorneys, choose a bond, send it to your client for payment, then download, e-file or print the bond. Specific obligee requirements? Trust us: Colonial’s a direct bond writer, so our experts are here to ensure obligee requirements across the country are properly met.
Our fiduciary bond portfolio includes: administrator, estate, executor, guardian, personal representative, probate, surrogate, trustee, conservator and the list goes on. Our court bond portfolio includes appeal, supersedeas, injunction, replevin, receiver and more.
Speedy, easy bonds court and fiduciary bonds, right here:
The Partnership Account® for Attorneys.
Colonial Surety is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA. Our customers have awarded us a 4.8 Trustpilot score.