INDUSTRY INSIGHT
LEGAL INSIGHT
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Education & Your Estate Planning
W
ith a basic bachelor’s degree at a
private university averaging more
than $100,000, families who are
excited to see a child go off to
college are a lot less excited to see the bill.
That’s why planning for future educational needs
for loved ones is an integral part of any parent or
grandparent’s estate planning. Parents of young
children often procrastinate in formulating an
estate plan. However, estate planning for this
particular demographic is exceedingly important.
Legal instruments exist to ensure that the wishes
of a parent are effectuated, even in the event of an
untimely death.
“Even if they don’t have college-age kids, parents
may have grade school, middle school or high
schoolers who will be in college one day,” said Joe
Covelli of Covelli Law Offices. “With educational
costs on the rise, parents, grandparents, uncles and
aunts should all be thinking about ways to ease that
burden. There are several measures available to plan
for the educational expenses of school-age loved
ones through estate planning.”
The first way is to set up a trust. While it may
sound like something only for the wealthy, a trust
is available to people of all incomes. It can contain
strict guidelines to ensure that a bequest is devoted
specifically toward educational expenses. The
expenses can be governed by a trustee – who can
constantly oversee the earnestness of the educational
endeavors of a beneficiary. Alternatively, you can
provide for discretion in the possible payment of
tuition, room and board, or books. You can even
address student transportation or off-campus
boarding. The guidelines of your trust can be as
narrowly or broadly defined as you choose. Trust
funds may also be devoted toward a vocational
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program, or toward the formation of a business entity,
in lieu of the traditional college route. A trust can be
set up as part of an estate plan or as part of “lifetime”
planning, depending on the particular situation.
Another vehicle for funding a student’s education
is the often underutilized 529 tuition savings plan,
which is akin to an IRA for educational expenses. A
529 allows money to grow, tax free, until a child is
old enough to withdraw from the fund for qualified
educational expenditures, which typically means
tuition, boarding or books. But a recent change to the
law broadened the applicability to cover tuition at
private schools, of some plans, up to $10,000 a year.
What’s more, if you have a child who finishes college
without using all of the 529 funds, the beneficiary on
the account can be changed in order to alternatively
benefit a younger child who is still in or just starting
school. If no other children are in immediate need,
the funds can be withdrawn, minus the taxes owed.
A third way of providing for a student’s education
is the Federal Uniform Transfer to Minors Act, and the
Pennsylvania Uniform Transfer to Minors Act, which
allows for gifts of up to $15,000 to be transferred
to a minor, tax free. However, these assets may be
detrimental in cases where financial aid is necessary,
counting against the student in qualification
formulas.
“There’s no one-size-fits-all solution because every
family is different with differing goals and needs,”
Covelli said. “That’s why it’s best to sit down with
a legal professional to look at all the options and
choose what’s best.”
For more information on Covelli Law Offices, go to
Covellilaw.com online, or call 412.653.5000. Covelli
Law is located at 357 Regis Avenue (across from the
Pleasant Hills-West Mifflin Post Office).
Joe Covelli has over 37 years of legal
experience and is a “5 Star Professional
Award” recipient. He is a member of the
National Academy of Elder Law Attorneys,
and he heads a team of attorneys with
expertise in several areas of the law. For
more information, call 412.653.5000, or visit
www.covellilaw.com.
FREE Consultation | Call Today! 412.653.5000
WEST JEFFERSON HILLS
❘
FALL 2018
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