As part of your estate, you may want to set up a trust or a savings account for children or grandchildren to go to college. This can be a great way to distribute your earnings, especially if you want to help but you also want to make sure the money is really used the way you intended; you don’t want to give money with the idea of college in mind and then see your grandchild buy a car with it, for example.
However, children sometimes change their minds. What if you set up a fund and give it to an heir, only to find out later that he or she is not going to go to college?
The first thing you should know is that “traditional” colleges aren’t the only ones the account can be used for, in most cases. If your child or grandchild is thinking about trade school, for example, the money can still be used for shorter programs. The person does not have to go for a standard four-year degree to use that funding. In fact, a shorter program may even be better because a small fund may entire cover the cost, whereas it would have merely helped with the longer program.
The next thing you should know that the account can be altered. Do you have other heirs who do want to go to college? Just put the account in someone else’s name. For example, perhaps an 18-year-old grandchild just announced that he’s not going to college, but another child of yours just had a new baby. The fund can be switched into that young child’s name, where it may continue to grow for years, making it even more valuable.
When any complications arise with trusts and other funds, you need to be aware of all of your options in New York.
Source: Schwab, “529 Accounts: What Happens When Your Child Doesn’t Go to College?,” Carrie Schwab-Pomerantz, accessed Dec. 11, 2015