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Include college savings plans in your estate planning

Many young parents in Lee County, Florida may not even think about having an estate plan. This may partly be due to the fact that many see themselves as invincible. It is true that the typical American will live past the age of 75, but accidents and illness do occur, and when they do it is important to be prepared.

One thing that should not be overlooked is what will happen to the money you have saved for your children to go to college. If you have opened up a 529 plan or something similar, it is important that you name a successor whom you trust to handle the funds for your child in a manner with which you would agree. You may even have your will executor distribute the withdrawals. 

In addition to having a primary successor, it is also a good idea to name a secondary owner. This ensures that if the primary successor dies, someone of your choosing will still be handling the account instead of having the state name someone.

If no successors are named and your child is over the age of 18, he or she may be named the owner of the account and have access to the funds. This is fine if you have a responsible child, but it can also be very tempting for a young college student to take that money and spend it on something non-education related. This not only defeats the purpose of the account, but your child may face tax penalties for doing so.

An estate planning attorney can help you with the process of naming successors for your child’s education plan and ensure that the money you have put away for your child’s education is used the way you want it to be. 

Source: U.S. News, “Make College Savings Accounts Part of Estate Planning,” Reyna Gobel, May 31, 2013