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Estate Planning with 529 Plans: 4 Things to Ask


Planning for the future isn't just about accumulating wealth; it's about building a legacy. Integrating estate planning with 529 accounts can help secure your family's financial future and pave the way for educational success, however, navigating this process can be complex. Here are four questions to help you build a comprehensive strategy that aligns with your goals and values:


1. What are my objectives?

Start by considering your goals for estate planning. How many beneficiaries are you planning to provide for? What are their ages and your desired legacy? Understanding your objectives will shape your financial strategy.


2. What is my financial situation?

Take stock of your current financial status, including assets, liabilities, and net worth. Understanding your financial position will give you a clearer understanding of how much you can allocate to a 529 account and other estate planning vehicles.


3. What are my 529 account options?

Research different 529 plans to find one that aligns with your investment preferences and goals. Consider factors such as investment options, fees, and state tax incentives.

For example, Invest529 offers a range of investment portfolios tailored to different risk tolerances and time horizons. From age-based portfolios to static portfolios, Invest529 provides flexibility to meet your loved ones’ educational needs. Additionally, contributions to Invest529 may be eligible for a Virginia state income tax deduction, offering potential tax savings for Virginia residents.


4. What are the 529 account tax benefits — and limitations — I should consider?

Contributions made to a 529 plan are considered completed gifts to the student and generally do not count toward the taxable estate of the account owner. In 2024, contributions of up to $18,000 per year, or $36,000 for married couples, are exempt from gift tax.

Special rules for 529 plans allow a gift giver to make a one-time contribution of up to five times the annual gift tax exclusion amount and spread it over five years, resulting in a tax-free gift of up to $90,000 in 2024 (for joint taxpayers, this can be up to $180,000). Related: 529 Plans and Tax Benefits

You can open and contribute to multiple 529 accounts for different beneficiaries (students), but there are limits on how much you can contribute. Additionally, others can contribute to your 529 accounts, in order to reduce the size of their taxable estates.

Once you’ve considered these questions, be sure to consult a tax advisor or financial professional. Work with an attorney to create or update essential estate planning documents, including wills, trusts, and powers of attorney. Experts recommend that individuals regularly review and update their plans to reflect any financial changes or life updates.

Virginia529 does not provide tax, legal or investment advice. Please consult a tax, legal or investment professional if you have questions about your financial, legal or investment situation.

Resources to help you learn

Frequently Asked Questions

Find answers to the most common questions about 529 plans.

Smart Savers Academy

Tune in to a live episode and ask questions of the presenter, or watch a previously recorded webinar below.

Invest529 Portfolio Performance

Review and compare historical returns of Invest529 portfolios.