Good news to 529 account owners – you’re on the right track saving for your young person’s college expenses! Though there is potentially one more step to consider: adding a joint owner or successor owner to your college savings 529 account.
We recently were advised by an estate attorney we work closely with that 529 accounts can be subject to probate proceedings if there is no joint account owner, nor a successor owner named. She was speaking from a recent experience.
As a result, our team has reached out to all our clients who do not have a joint owner or successor owner named on their 529 account, and we are in the process of protecting our clients and beneficiaries from this risk.
Probate is the process of settling a deceased person’s estate and can be lengthy; a typical timeline is 6-12 months, though it can take longer. Probate can result in additional legal fees and stress for your surviving spouse and/or estate executor. Furthermore, if the beneficiary of the 529 needed the funds for education expenses, the beneficiary might not be able to access the funds while the account is in the probate process.
By naming a joint owner and/or successor owner on your 529, if you pass away, the account avoids probate.
What is the difference?
The difference between adding a joint owner vs. a successor owner:
- A joint owner owns and controls assets in the same manner as the primary account owner. For example, they can adjust contributions, request withdrawals, update the address, etc. Most likely this is your spouse and/or co-parent of the beneficiary.
- A successor owner does not have any ownership or control over the assets unless and until the account owners pass away. Successor owners can also be changed while the current account owners are still alive. Most likely this is the person you want to control the account if something happens to you as the primary owner(s).
We are here to answer your questions and guide you to clarity and confidence in this otherwise confusing world.
As always, our door is always open. It is a pleasure to be of service.
About TenBridge Partners
TenBridge Partners is an independent financial planning and investment management firm based in Portland, Oregon with a simple focus of honoring the fiduciary responsibility of putting clients first.
Planning is central to everything we do. Our focus is on a complete understanding of a client’s and potential client’s needs through the financial planning process, before we move forward with anything else.
We bring clarity and confidence to an otherwise confusing financial world.
We are about people.
Sirra Anderson Crum CFP®
Financial Planner
The information contained in this correspondence is intended for general educational purposes only and as a means for facilitating a conversation. Please consider our door always open to discuss your particular situation and how this information might benefit you and fit your specific needsThe information contained in this correspondence is intended for general educational purposes only and as a means for facilitating a conversation. Please consider our door always open to discuss your particular situation and how this information might benefit you and fit your specific needs.