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Trust versus 529 question for kids

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  • Trust versus 529 question for kids

    Hi everyone,

    My sister-in-law recently died unexpectedly, leaving behind her husband and two boys. We set up a GoFundMe account to help with the boys' college fund and raised nearly $50,000. I wanted to ask the group's opinion regarding the pros and cons regarding placing this money in a trust versus opening 529s for the boys. Thanks so much for your help and input regarding this, as I have limited experience with this. Thanks!

  • #2
    If you only are concerned about covering college expenses, the 529 seems simpler and potentially more favorable from a tax perspective.


    • #3
      I would go with the 529. I'm a huge fan of the Vanguard 529.

      Remember, it can be used for K-12 education as well as trade and technical schools.

      This also prevents potential misuse of funds with a future blended family.

      Plus, it makes it easier for other family to directly contribute to the funds for birthdays and holidays.


      • #4
        $50,000 in a trust would feel like you're just putting it in a bank account and letting it sit since there's not much management involved. The trust document itself is not complicated, but in this case really doesn't do much either. The tax benefit of a 529 plan is probably the largest consideration. Just make sure you're fine with the restrictions. Even those probably will help husband and boys from being too tempted to spend the money later on non-school expenses.


        • #5
          Thanks all, appreciate your help!


          • #6
            So sorry for your family’s loss - that is heartbreaking to imagine. I can only add that you’ve received good advice above.
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087