As the holidays roll by, the end of the year is a good time to take stock of the changes that have occurred in your family and the plans you should make for your children’s future. Here are a few items to consider from a legal perspective.
Superfund College Savings
A 529 college savings plan provides the great benefit of tax-free investment gains on account balances. Normally, contributions are limited to $14,000 per year before triggering the federal gift tax. However, if you are receiving a year-end bonus, or if grandparents or other relatives would like to contribute a large amount to your kids’ accounts, federal law allows making up to five years’ worth of contributions in advance without incurring any gift tax liability.
With strategic timing of contributions in December and January, this allows up to $84,000, per donor, per child, to be added to college savings accounts and to start accruing those tax-free gains. That’s quite a head start!
New Additions to Your Family
If you’ve had a child in the last year – or the last few years – and you do not have a will, putting one in place should be a top priority. A will is the only place to designate a choice of guardians for your children, and to ensure that a surviving spouse will be financially protected.
Under Georgia law, when there is no will, a surviving parent of two or more children receives only about one-third of the assets that pass through the estate. The other two-thirds is inherited by the children, and they would have complete control of the assets upon reaching age 18.
Having a will enables you to exercise your choice of guardian and ensures that the surviving spouse would have control of the family assets – as most people intend.
If Georgia Is Your New Home
If you moved to Georgia in 2016, you should prepare to file two state income tax returns – one for your previous state of residence and one for Georgia. It is also a good idea to review your choice of health care agent, financial power of attorney, and guardian for children. You may want to name local family members or trusted friends in these roles to ensure that they would be able to step into an emergency situation without delay.
If your estate planning documents were prepared in another state, you should have them reviewed to ensure that they comply with Georgia law.
By addressing these potential action items, you will be able to begin 2017 with the peace of mind that your family has a solid plan for the future.