Image Credit: www.sxc.hu - free image
Every now and then I will get a call from clients inquiring about whether or not a trust fund is the right for them to use when creating a way to save for a grandchild's college education. Historically this may have been an ideal vehicle, but it is more obsolete because of the creation of 529 plans.
Authorized under Section 529 of the Internal Revenue Service Code, these plans allow tax-advantaged ways to save for college. Sponsored by states, state agencies, or educational organizations, they are common throughout the country. My husband and I opted to create one for each of our children; with an initial funding immediately after receiving the Social Security Number! Deposits give us an income tax break, there is no tax on growth, and when used for higher education, not tax is applied when funds are removed.
And 529s are not reserved solely for parents. Grandparents can also create accounts. The adult is the owner, the beneficiary is the child, and a successor owner can be listed to take into account the chance of the owner predeceasing before the funds are used. Should the child not need the funds, another beneficiary can be listed.
Here is a great link if you want to read more details on 529s. And remember, a blog is not legal advice. Please consult counsel in your home state for your questions and concerns.