We all know grandparents and grandchildren have a special bond. If you are a grandparent of college age children, or those attending private schools in some cases, you have to be alarmed about the amount of debt students are racking up. Economists are estimating students will be paying loans for as long as 20 years, affecting their ability to get homes and cars.*
Grandparents have a special tax saving measure that will be a wonderful gift to their favorite student. They can make direct payments of tuition to a school free of gift tax. So what does that mean to the grandparent? It means that even if you have contributed to 529 plans or given to your student directly, you can exceed the $13,000 annual gift tax exclusion by writing the check directly to the educational institution for tuition payments. The grandparent is giving now and also reducing their future taxable estate.
What does it mean to your grandchild? It could mean less debt and the ability to start their professional career on a more solid financial basis. With the giving season right around the corner, this may be a strategy you want to consider. To learn more, contact your financial planner at the Center.
Source: Huffington Report, 7/20/2012
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional.