For many, being a grandparent is a fun and fulfilling role that allows you to help your grandchildren financially if you so choose. Many grandparents focus on helping fund their grandchild’s education to set them up for a lifetime of success. However, this process can be confusing for some, so understanding how to use estate planning to your benefit when funding someone’s education expenses is essential. The following blog explores the questions you may have and how Pennsylvania estate planning attorneys can help guide you through this process.
What estate planning options do I have to pay for my grandchild’s education?
If you’ve decided you want to fund your grandchild’s education expenses, understanding the options you have to pay is crucial.
Some families opt for a state-sponsored 529 plan. While this is great for those who want to pay for college expenses, there are many limitations. Not only can the money not be used for other expenses in case of an emergency, but these plans have many penalties that can be triggered accidentally.
While some may think leaving the money to pay for college in a will is a great idea, this can become tricky. If you pass away before your grandchild attends college, they can access the funds. However, if you do not, the funds will not be accessible unless you change the terms of your will. It’s also important to note that if you leave the funds in a will and your grandchild inherits them before starting college, they are the sole beneficiary. This means they do not have to use the funds for college but could make irresponsible decisions with the money, unless you note down the conditions of the gift, which can get tricky.
Another option to consider is establishing an irrevocable trust fund. Not only does this allow you to designate your grandchild funds directly to their university’s bursar office, meaning you will be able to make qualified transfers and avoid the gift tax, but the funds could be used to pay for any emergency expenses if they should arise.
How can an estate planning attorney help me through this process?
As you can see, this process can be overwhelming. There are many options to consider when planning to pay for your grandchild’s education, and it can be challenging to determine which is the best fit for your family. Working with an experienced estate planning attorney can help you feel secure in the decision you make, as they can explore the options for funding an education in further detail.
At Friedman Schuman, we understand how complex these issues can be. As such, we are dedicated to working with those looking to start planning their estate to make this process as simple as possible. Contact our office today to learn how our dedicated legal team can help you.