What Happens to My Child’s 529 College Savings Plan If I Die?

You and your spouse want to provide as much as possible towards your child’s future college education.  So you did the responsible thing years ago and started a 529 college savings plan.  But what happens if you and your spouse die while your child is still a minor?  Well, your estate will become the owner of the policy while your child will remain the beneficiary of the policy. (Thanks for verifying that for me, Ken!)

So what’s the problem then?  Well, as with most things in the law (and seriously, I do NOT mean to sound like a smug law professor – no they’re not all like that of course, but yeah, some really are! but I digress…) – it depends.  (Now comes the Socratic Method I used to despise but have recently taken to using on my poor children to help them arrive at the answers to their own questions, partly to build their confidence and problem-solving skills, and partly, I confess, as a way to keep my own sanity when they’re asking me stupid questions to which I know they know the answers, but I digress again…) – How much is the 529 worth?  Is it enough to push your estate up over the taxable threshold and make your plan inadequate to accomplish your estate planning goals (like maybe making sure your hard-earned money goes to your children rather than to taxes to be distributed however the government of the day sees fit? oh man I sound like I’m partying in a way I assure you I’m really not!)?  How much would that 529 add to your probate estate and how much would come out in fees and expenses for dealing with it?

OK – sorry, I’d really love to stay and chat about such pleasant topics as our prospective premature deaths while our kids are still little and how on earth we’re going to pay for college for all our kids (“3 is the new 2!”), but this is my “office assistant”‘s “witching” or “sour” hour (a.k.a. Mama’s ready for “happy” hour!).  So I’m gonna call it a day, get my other “assistants” and come back to the office later, when it’s nice & quiet…  In the meantime, if you have any questions for me, please post away in the comments here or on my Facebook Fan Page (are you a fan? not my biggest fan, that’d be creepy, but just a regular fan).  It’s been a long week (can you tell?).  Hasta luego!

About Danielle G. Van Ess

Danielle G. Van Ess is a Massachusetts (born and raised), experienced estate planning and small business attorney who helps her clients protect and preserve what matters most to them. To learn more, please visit: dgvelaw.com or call: 781-740-0848