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By Masa Yamazaki, CPWA® CDFA®

Investing in another person’s education is a gift that keeps on giving, empowering younger generations to achieve their dreams and contribute meaningfully to their communities. For parents and grandparents, securing the financial resources for a college education is a thoughtful endeavor that requires careful consideration of various funding options.

One avenue worth exploring is a 529 College Savings Plan. This tax-advantaged investment account allows families to save for education expenses while enjoying potential growth through investment. Additionally, withdrawals for qualified education expenses are tax-free, providing a financial advantage over traditional savings accounts.

Another approach is to establish a custodial account, such as a Uniform Gift to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account. These accounts allow parents and grandparents to contribute funds that are managed on behalf of the child until they reach adulthood, offering flexibility and control over the assets.

For some families, paying for their beneficiaries’ education directly helps reduce their estate without impacting their lifetime gift and estate tax exemption, thus lowering potential estate taxes while supporting education opportunities.

Ultimately, a combination of these and other options beyond the scope of this article may be the most effective approach. Open communication among family members about their financial capacities and aspirations is key. By exploring these funding avenues and planning ahead, parents and grandparents can contribute significantly to the educational journeys of their loved ones, ensuring a brighter and more fulfilling future. 

 Masa Yamazaki, CPWA® CDFA® is a Principal at Oxler Private Wealth®, an independent, family-owned and operated wealth advisory firm in Rye Brook and Manhattan, offering financial care to women and families.  For a complimentary, no-pressure conversation, call (212) 785-2860 or visit www.oxlerpw.com.