Gifting & Estate Planning
It takes a whole family (and sometimes many friends) to prepare a child financially for college. How many times have relatives and friends asked what to give a child for his or her birthday? Now you can answer the question with a Tomorrow’s Scholar gift card. Just look at the selection on the right side of this page. What better gift than an education? And what better time to give than at birthdays, graduations, holidays, achievements and other milestones? Engaging loved ones to help with a child’s education is as easy as 1-2-3:
- Compile a list of friends and family
- Send them a gift instructions flyer and gift card with a personalized note
- When the gift is received, have the child send a thank you note (admittedly the hardest step)
Here are some tips on how to involve the whole family. By sharing college saving as a “family experience” you not only make it more enjoyable, you help bring a child’s education within reach.
- Talk to everybody. There are so many things you have to do on your own as parents, educational funding should not be one of them. There’s usually a wide circle of influence each child has. All of them can be a part of helping them achieve the dream of higher education.
- Use the low contribution requirements to your advantage. One of the great things about 529 plans is that anyone can contribute, at virtually any amount. Don’t be afraid, at any one of the child’s milestones, to suggest the gift of a contribution. All contributions can go into the one account for the child (under parental control).
- Start saving as soon as you can. Investing a fixed amount each month can really add up over time, especially with the tax-free earnings provided by 529 plans.
- Involve the child. Education is more meaningful if a child has a financial stake. Gifts, allowance, part-time job income can all be contributed into a 529 plan as they come in.
- Give regular college savings gifts at birthdays, holidays and/or special occasions. Children who grow up expecting a little something towards education at key milestones have a good chance of learning the value of education. Grandparents can give up to $28,000 per year per child (if filing jointly) before incurring gift tax.
- Don’t wait for birthdays and graduations. Show how proud you are of achievements and honors as they occur. Show them how much their success means to you by tying it to their future success.
- Consider accelerated gifting. 529 plan rules allow people who haven’t given, or who want to give a lump-sum gift instead of over time, to increase the gift amount to a total of $150,000 (couples) or $75,000 (single) per beneficiary in a single year. Not only can this increase the bang for your long-term savings buck, it can reduce the size of your taxable estate while funding a child’s higher education.
Friends and Family
- Use special occasions to show that you value education. Helping underwrite the high cost of higher education means a lot more in the long run than the latest toys and games.
- Remember that anyone can contribute to a 529 plan. The plan’s flexibility, plus high maximums, makes it a perfect place to hold the special gift you want to give to a child.
- Gift and estate tax benefits apply to everyone, too. Each year you can remove up to $30,000 (married) and $15,000 (single) from your estate per child free of gift tax. Or, with accelerated gifting, you can make a one-time contribution of up to $150,000 (married) or $75,000 (single), also free of gift tax and out of your estate (as long as you don’t make other college savings gifts to that child within five years).