Estate planning is one of the most important forms of financial planning, but it is often overlooked as people make plans for other aspects of their life. The cost of education is at an all-time high, and saving for it should be a priority for all families. You can save and invest money for education with the help of an estate planning attorney in Los Angeles.
Creating a detailed trust ensures that your child will have the funds to go to college no matter what. Here’s how estate planning lawyers can help you give your child the gift of an education.
Valuing Education by Planning Ahead
The average cost of a college education is well into the five figures. According to the Education Data Initiative, the average cost of one year in college is $35,551 per student. That figure is about $10,000 lower for in-state public school tuition, and about $20,000 higher for private schools.
That cost can be overwhelming to a young adult without financial support. When you plan ahead with a living trust, you can make sure that a college degree is within reach. A qualified estate planning attorney will help you make the most of that money and even reduce estate taxes.
Estate planning allows you to set aside money and keep it safe for your children, such as in an irrevocable living trust. Estate matters become more complex for families that own property and have substantial liquid assets.
Trusts and Saving for College
Trust funds are an excellent way to keep assets safe and even allow for growth. An estate planning lawyer can guide you through the many types of trusts available and find one that fits your needs.
One of the main benefits of a trust is that they allow you to avoid probate. They also allow for smooth, immediate transfer of assets to family members and make gift tax planning simpler. When you work with a trust administration expert, they can simply maintain the assets or invest them to increase their value, depending on your preferences.
Trusts are also flexible. They allow you to make changes to the terms over time in order to get the most benefits from them. For example, if you discover that adding more assets to a trust helps with your income tax planning, you can proceed to make additions or change its terms.
Another example is, if you have another child, you can add that child as a beneficiary. You can also create a new trust just for them. Expert financial and legal services provide a personalized solution to your unique estate planning needs.
What is the 529 College Savings Plan?
The Internal Revenue Code 529 allows parents to invest in their children’s education with several tax advantages. It’s an essential part of any parent’s estate plan.
There are two types of 529 plans, such as prepaid tuition plans and college saving plans. The former allows you to lock in current prices, avoiding increases. However, they don’t offer investment opportunities like college saving plans.
The 529 plans offer numerous benefits, including:
- No age or income limit to participating in this program
- Plan contribution limits are high
- If you make a qualified withdrawal, you won’t have to pay taxes on your trust fund earnings.
This college savings option can be an excellent form of estate tax planning. It allows you to contribute $15,000 a year per beneficiary without gift taxes. However, it is unique because it allows for a lump-sum contribution of $75,000 in the first five years of opening the plan.
Putting money in this savings plan reduces your taxable estate. Making good use of your 529 plan allows high-net-worth families to lower their federal estate taxes.
Los Angeles estate planning attorneys can help you set up a savings plan for your minor beneficiaries and weigh the pros and cons of different options.
Benefits of Planning for Educational Savings with Estate Planning Attorney Los Angeles
Education is likely one of the biggest, most significant costs your child will face in early adulthood. Saving for your child’s education benefits both of you and leaves you prepared to handle the high costs of college tuition.
Lets You Provide Your Child with a Good Life
An education will provide your child with the foundation for a good career and financial stability. People with college degrees earn significantly higher salaries than those without, and degrees have become ubiquitous in the professional world.
If you want your child to have a better chance of earning a high salary and working an engaging job with good benefits—supporting their education is a great way to do so. A Los Angeles trust lawyer can help you set up a trust fund tailored to your financial situation.
It Lessens the Financial Pressure on Your Children
When your child has to fund their own education and take out loans, it can lead to years of financial strain and hold back their financial progress.
When you start saving ahead of time, you can build up a solid college fund that covers a significant portion of tuition fees. That means your child can avoid loans and attend school without stressing about finances.
Allows You to Plan for Other Important Things
One of the benefits of careful financial planning is that you can plan ahead for a broad range of important expenses.
Knowing that your child will be taken care of means you can make sure you are saving for retirement, a new home, or any other financial goals.
Are You Ready to Plan for Your Children’s College Education?
With tuition fees higher than ever, it makes sense to factor tuition into estate plans. You can reduce your taxes, compound savings, and more.
Working with an estate planning attorney in Los Angeles will help you handle all your questions about trusts and estates. McKenzie Legal & Financial can help you give your children a quality education, setting them on the path to a good career and comfortable lifestyle.
Our attorney is a state bar member and a financial consultant. He has spent many years serving Los Angeles county and understands local law intimately. To schedule your free consultation, contact us at 562-594-4200 at McKenzie Legal & Financial today!