Estate planning

It’s time to go back to school


Janet Colleton

This past weekend, while trying to schedule a haircut, I noticed that every salon has a wait of at least an hour or more. “Back to school,” the hairstylist recalled. She was right. Parents have been preparing primary and secondary school students for the comeback. Living in a ‘college town’, I can hardly miss the influx of new residents who have been walking through town, moving into dorms, and following signs to the University of West Chester car parks in the past few weeks.

The campus approach is beautiful. There is energy associated with new experiences and new learning. I also understand, by the way, that some seniors may, if they wish, explore auditing some courses. Active seniors are sure to take part in the university’s life and its many activities.

With high hopes comes high expectations. As the restrictions of the novel coronavirus (COVID-19) are overcome, in-person learning opens new doors and alternatives.

Other issues for new college aspirants include opportunity and cost. Student loans have been a serious issue of discussion lately. Also, with so much competition and so many options, it can be difficult for recent high school graduates to decide what they want to do. It has been found that college students have a greater earning power provided they graduate.

Meanwhile, there are ways grandparents with the means can help. A recent article by Kathryn Flynn, 13 Easy Ways Grandparents Can Help Pay For College gives ideas:

• Pay tuition fees directly to your grandchild’s school. Note – Gift tax is not a serious consideration though it is referred to in this article. Also note that, for this method and others, make sure that you will not be affected by Medicaid’s award-making rules at a later date and that you have sufficient resources to contribute.

• Open a 529 plan in your name. 529 plans have been an excellent way to help grandchildren (or children) pay for college. They provide tax-free earnings and tax-free withdrawals when the money is spent on qualified higher education expenses including tuition, books and supplies, and some room and board costs. If withdrawals do not qualify, there may be tax consequences, but note that funds deposited and intended for one child/student, for example, if that child decides not to continue education, can be used for another child. Also note that it is important to use 529 funds for college or apprenticeships. So trade school is also a possibility.

• Contribute to a 529 plan developed by your grandchild’s father. If you start early, the fund can grow exponentially. With 529 consider impacting your student loan application.

• The article suggests that you can provide a loan for your grandchild. For a number of reasons, I don’t find this an attractive proposition.

• For similar reasons, I don’t think offering to pay off student debt after graduation is a good idea. I think the direct creditor-debtor relationship should be discouraged.

• Support and encourage the interests of your grandchildren. Emotional support and encouragement can make all the difference for grandchildren (and children). In my own case, I remember Aunt Fran’s comments on my beginning to study law. Money is not the only way.

• US savings bonds. This is not a common method but the article mentions an exception to the interest tax on Series EE and I bonds where the proceeds are used to pay for higher education.

• Establishment of an education fund. This process is more complex but allows for specific text tailored to your wishes as a trust settler. It can be irrevocable which may or may not be desirable.

• Assist with college savings and college-finding efforts. This can be done in a number of ways and does not necessarily require an expense.

• Putting funds into a custodial account under UGMA/UTMA. These are Uniform Minors Law Gifts/Unified Minors Law Transfers. It can be withdrawn at the age of 18.

• Contribute to a Coverdell Education Savings Account. There are some limitations.

• Share the gift of time and interests. This should be clear without comment. Your interests can point your grandchild (or child) in the direction.

• Hire a financial planner to help. This may apply in cases where large sums of money are involved.

Janet Colleton Esq. She is a CELA-certified senior law attorney (CELA) by the National Geriatric Law Foundation and practices exclusively in senior citizen, retirement, life care, special needs, planning and estate management with offices at 790 East Market St. 250 West Chester, 610-436-6674, She is a member of the National Academy of Seniors Law Attorneys and the Pennsylvania Association of Seniors Law Attorneys, and with Jeffrey Jones, CSA, co-founder of Life Transition Service, LLC, a service for families with long-term care needs.


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