A 529 Plan is like an IRA, however, the funds are dedicated for educational purposes. Each plan has an owner (I'm the owner for both of my children's accounts, my husband is the successor), and a child is the beneficiary. We make annual deposits and receive a deduction on our State income tax (we use EdVest, Wisconsin's plan). The funds will grow, hopefully, and our children can take the money out to pay for college, grad school, etc.
529s offer an alternative to an "educational trust". Parents, grandparents, aunts, uncles, anyone can open an account, list someone else, or themself, as the plan beneficiary, and begin depositing money. The article I read briefly discusses a loop hole in the gifting law:
You're allowed to give $13,000 a year to another person without triggering a gift tax. (And that applies to each spouse, effectively doubling the limit for a couple giving money away.) Federal rules allow you to do five years of 529 funding at once without triggering a gift tax. But changing the beneficiary of a plan is the same as giving a gift. So if the plan exceeds $65,000 when you change the beneficiary, you could end up either owing gift taxes on some of the amount transferred, or reducing the amount you could leave in a tax-free estate down the road.
As always, a blog post is not legal advice. Please contact an attorney to discuss your situation in detail.