Did you Know 529s are Powerful Estate Planning Tools?

Most of us associate 529 accounts as college savings vehicles. They're flexible, allowing you to transfer assets to anyone, including yourself, for the express purpose of furthering the education of your beneficiary. But did you know that a 529 can be a powerful estate planning tool, too?

1 min read
Modern Estate Planning
Not everyone is in a postion to set aside money for the next generation without jeopardizing their own goals, but if you're fortunate enough to do so, it's worth looking into your options. 

Specialized savings accounts, informally referred to as 529s, could be at the top of your list. They have quite a few advantages for the beneficiaries–but there are benefits for the odnors, too, given the high maximum contribution limits and tax advantages. 

The special tax rules that govern these accounts allows you to pare down your taxable estate, potentiallly minimizing future federal gift and estat taxes. Right now, the lifetime exclusion is $12.06 million per person, so most of us don't have to worry about our estates exceeding that limit. But htat new threshold is due to revert to just over $5 million per person by 2025.

The Framework
Under the rules that uniquely govern 529s, you can make a lump-sum contribution to a 529 plan up to five times the annual limit of $16,000. That means you can gift $80,000 per recipient ($160,000 for married couples), if you denot your five- year gift on your federal tax return and do not give another lump sum after those five yars are up. In the meantime, your investments have the luxury of time to compound and potentially grow. 

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