Determining when a trust should hold college savings
A revocable living trust can help individuals hold their assets. Some South Carolina residents who have a trust may wonder if they should use it to hold a 529 college savings account for a child’s future education.
The answer really depends on the situation. If the creator would like to name a successor who will be responsible for the 529 account and they want to prevent the account from being subjected to probate, using a trust to hold college savings is not necessary. What the trust holder could do is name a successor. It is possible to do this on the beneficiary form that is provided by the sponsor of the 529 plan. When the account owner dies, the account will be passed on to the successor who was named and will not go through probate.
One scenario where using a trust to hold college savings may be beneficial is when an estate owner would like more control over when and how the funds are used. Instructions can be included in a revocable trust to ensure that the creator’s wishes are followed. For example, they will be able to indicate that certain individuals can use the money for their higher education from the trust. Or they could indicate that the money should only be used for specific purposes. It could not be used, for example, for personal use after the trust owner’s death.
An individual who is interested in creating a 529 account needs to be sure that it includes appropriate language. This will ensure that their wishes are carried out. An attorney could help a client who is interested in this type of account or a revocable living trust.