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College Planning

Most wealthy parents want their children to secure their own financial future with the help of a college education. But with the rise of annual college tuition, it may seem like a daunting task to start saving 10 or 15 years in advance. Especially when saving for your own retirement at the same time. At CapWealth, our team is experienced in helping clients carefully plan for future college costs.

We work primarily with (but are not limited to) the following educational funds:

529 accounts

Available in almost all 50 states, 529 accounts are the most common type of educational investment fund. Contributions made into a 529 grow tax-free and can be withdrawn tax-free if it’s used toward higher education. With this type of account, you remain in control of how the funds are distributed even after your child reaches the age of 18. (Read President and COO Phoebe Venable’s Tennessean newspaper columns on 529 plans here and here.)

Coverdell ESAs

Educational saving accounts function like a Roth IRA. With ESAs, you can make contributions into the account tax-free, and if taken out appropriately, withdrawals are tax-free as well. Many wealthy families consider payments not just for college, but elementary, middle and high schools tuition, too. ESAs are designed to cover these costs.

Educational Trusts

Set up by your financial advisor, educational trusts allow you to choose how beneficiaries may use the funds. These types of educational accounts allow you to plan your child’s education more in-depth than other types of accounts. For example, you can require that the funds be put toward medical school or a technical school or toward full-time, part-time or even online classes.

UGMAs & UTMAs

Under the Universal Gifts/Transfers to Minors Act, minors can access securities in an account without the parents initiating the legal process of drawing up a trust. Unlike accounts that strictly contain securities, UGMAs and UTMAs allow you to pass on other types of wealth.

Before settling on a college investment account, you should consider how it will affect your taxes, the maximum annual contribution limit and its impact on need-based scholarships. We’re here to guide you through the college planning process and secure the appropriate educational account for your kids without sacrificing your retirement.

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