For many parents, savings for their kids education is a big concern. Many opt to put them in a tax-deferred savings vehicle like the 529 plan.
Not only is this a good way to save for children’s education related expenses like tuition, lodging, groceries, books, etc but there are some other loophole available too.
* You can change the beneficiary at any point to favor someone who goes to a more expensive school.
* You can use the money for your own education.
* You can give upto $60,000 to a single beneficiary in one go, although you can’t give that same beneficiary any more contributions for 5 years.(since the maximum gift amount is $12,000 per year)
* You can use it as an estate planning tool by moving money out of your estate (but not necessarily out of your control). If grandpa & grandma each gift $50,000 to each of their 5 grandkids, thats $500,000 out of the estate in one fell swoop! Of course, they better not die too quickly, else some of it may be taxable!
* Being able to change the beneficiary may also allows you to skip paying estate tax for several generations!
It might be complicated to understand and setup, but I think its definitely worth checking into.