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Guidelines for Grandparents Helping with College Costs

As a grandparent do you want to help fund the cost of college education for your grandchildren? First consider if you have enough money to ensure a comfortable retirement. If you are set financially, what may seem simple can become complicated if you do not consider what your objectives are and the impact of funding college expenses for your grandchildren.

As a grandparent considering funding college costs look at what your objectives are:

  • Promoting grandchildren’s education
  • Avoid entitlement issues by grandchildren and parents
  • Reducing estate tax exposure
  • Retaining control of your funds
  • Accessibility to funds in case of unexpected need
  • Ease of management
  • Flexibility (particularly if you have several grandchildren to consider)

We always advise our clients that if you decide to assist your grandchildren in funding a college education, it is important to involve their parents in the decision-making process. Your desire to help should involve the following considerations:

  • Financial ability of parents and other grandparents to fund college expenses
  • Will the amount and form of the gift affect the student’s eligibility financial aid
  • Gifts under UTMA or UGMA accounts may require tax filings by the child
  • Parent owned versus Grandparent owned 529 college savings plans
  • Timing and amount of the gifts
  • Earmarking funds to pay off student loans
  • Post graduate college funding

As you can see we have only touched on some of the issues to consider. We can help sort out the details of your family’s circumstances as part of your overall college funding plan.