The $570,000 Gift Nobody Could Tax: How Texas Grandparents Are Using 529 Plans to Shrink Their Estates and Fund Their Grandchildren's Future
Warren Hutchins retired at sixty-seven with $2.4 million and a promise to his six grandchildren: whatever you need for college, we'll be there. He had mentally earmarked $600,000 for their education and told his financial advisor he planned to give each grandchild $19,000 a year. His advisor nodded. What neither of them discussed: a legal provision that would have let Warren move $570,000 out of his taxable estate in a single afternoon — under his full control, invested for his grandchildren, protected from probate — without using a dollar of his lifetime exemption. Warren died unexpectedly at seventy-one. The money he intended for his grandchildren passed through probate instead. Three of the six grandchildren took out loans.
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