Education Planning
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- 529 College Saving Plans
Qualified state tuition programs or 529 College Savings Plans are designed to help people save for the cost of higher, and in some cases, secondary education. 529 College Plans provide several key benefits for investors, including tax savings, flexibility in selecting portfolios management, and offer the ability to control dispersions to beneficiaries. - Education IRAs
A Coverdell Education Savings Account, formerly called an Education IRA, is a trust or custodial account created to pay the qualified education expenses of a designated beneficiary. Parents, grandparents, other family members, friends and children themselves may deposit up to $2,000 per year for each beneficiary under 18 years old provided the total contribution does not exceed the $2,000 limit. - Education Trusts
There are several alternatives for planning for education financing with the use of trusts. Two traditional methods are through the Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act that established a simple way for parents to transfer stocks, bonds, mutual funds, annuities, real estate, fine art, patents, copyrights and life insurance policies to their children. Another approach is by use of irrevocable trusts. - Covercdell Education Savings Accounts
A Coverdell ESA, formerly known as an Education IRA, is a trust or custodial account created to pay the qualified education expenses of a designated beneficiary. Parents, grandparents, other family members, friends and children themselves may deposit money for each beneficiary under 18 years old.
Financial Services Education Planning Education Trusts
Education Planning, Education Trusts
UGMA/UTMA
The Uniform Gift to Minors Act (UGMA) and the Uniform Transfer to Minors Act established a simple way for parents to transfer stocks, bonds, mutual funds, annuities, real estate, fine art, patents, copyrights and life insurance policies to their children.
The parent establishes a custodian account and appoints a custodian (trustee). The parent then irrevocably donates the assets to the trust and the assets technically belong to the minor although controlled by the custodian until the minor reaches termination age (18 or 21). The custodian has the fiduciary responsibility to manage the assets in a prudent manner for the benefit of the minor. The income from the assets is taxable to the minor at their tax rate not the parents (significant tax savings).
Trusts/Irrevocable Trusts
A trust is a relationship whereby property (including real, tangible and intangible) is managed by one person/persons/organization for the benefit of another, or in this case, for the education of the beneficiary. A trust is created by a settlor/trustor/grantor/donor, who entrusts some or all of their property to people of their choice (the trustee). The trustees hold legal title to the trust property, but they are obliged to hold the property for the benefit of one or more individuals or organizations (the benefiary), usually specified by the settlor, who hold equitable title. The trustees owe a fiduciary duty to the beneficiaries, who are the "beneficial" owners of the trust property.
The trust is governed by the terms of the trust document, which is usually written and occasionally set out in deed form. It is also governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law.
An irrevocable trust is is a trust in which the terms of the trust cannot be amended or revised until the terms or purposes of the trust have been completed.
Dugan & Lopatka Financial Services, LLC104 E. Roosevelt Rd., Wheaton, Illinois 60187Phone: (630) 665-0914Fax: (630) 665-5030
DUGAN & LOPATKA FINANCIAL SERVICES IS NOT AN AFFILIATE COMPANY OF LPL FINANCIAL. SECURITIES AND ADVISORY SERVICES OFFERED THROUGH LPL FINANCIAL, A REGISTERED INVESTMENT ADVISOR, MEMBER FINRA/SIPC.
