Stern, Kory, Sreden & Morgan, AAC
Newsletter
Will the value of my 529 account be included in my estate or my beneficiary's estate?

All contributions to 529 plans are considered present interest gifts. So, in general, the value of a 529 plan is included in the estate of the designated beneficiary.

There is an exception if you contribute a lump-sum amount to the account in a given year and make a special election to treat your contribution as if it were made evenly over a five-year period. If you make this election and then die before the five-year period is up, the portion of the contribution allocated to the years after your death will be included in your gross estate.

For example, let's say you make a $50,000 contribution to a 529 plan in Year 1 and elect to treat the gift as if it were made evenly over five years. You die in Year 2. The result is that your Year 1 and Year 2 contributions — $20,000 ($10,000 each year) — are completed gifts to the beneficiary. The remaining $30,000 ($50,000 minus $20,000) is included in your gross estate.

Note: Investors should consider the investment objectives, risks, charges, and expenses associated with 529 plans before investing. More information about 529 plans is available in each issuer's official statement, which should be read carefully before investing. Also, before investing, consider whether your state offers a 529 plan that provides residents with favorable state tax benefits.



Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011