Alignment of Opportunity: Taxes, Rates and Market Values

• When interest rates are low, it’s a great time to make or renegotiate intra-family loans.
• When real estate values are low, it’s a great time to invest or gift real estate.
• When tax exclusions are in place, it’s a great time to make outright gifts or consider the strategic, albeit dizzying, array of trust vehicles -- e.g., Intentionally Defective Grantor Trust (IDGT), Grantor Retained Annuity Trust (GRAT) and Qualified Personal Residence Trust (QPRT).

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Education funding: Unraveling the mystery of 529 plans

Since its creation in 1996, the 529 plan has become increasingly popular as a method of saving for and funding college educations. However, despite its popularity, choosing the right plan has remained a confusing process. In this article, we will explain how a 529 plan works and give you tools to choose the right plan for you and your beneficiaries.

While there are two types of 529 plans, a College Savings Plan and a Prepaid Tuition Plan, we will focus here on the College Savings Plan since it does not require you to prepay fees for one specific educational institution and, therefore, is more flexible than a Prepaid Tuition Plan, which designates funds to be used at a specific, qualified educational institution.

What is a 529 College Savings Plan?
A 529 plan is an investment vehicle that may be established by anyone for the benefit of a given beneficiary. It allows individuals to save for eligible education expenses, such as qualified college, university, vocational school or other post-secondary expenses. Interest, dividends and capital gains in a 529 plan are tax-free if used for qualified education expenses. Although contributions are not tax-deductible on your federal tax return, they may be deductible on your state tax return. There is no residency restriction for establishing some 529 plans, however, tax deductions for contributions to a state's 529 plan can be claimed only by residents of that state. Note, this is only useful if you live in a state which levies income tax, and not every state with an income tax allows for deductions. In any case, contributions should not exceed the limit as set by the state.

With a college savings plan, amounts are contributed up to the plan’s dollar limit. Investors are allowed to choose the investments from a plan list. Some investment options are age-based, with the most risky investments made available to younger beneficiaries. As investors bear the risks of the investments, the ultimate amount available for eligible education expenses will be affected by the investments’ rate of return...