college hatTODAY President Obama announced his plans for a new and improved college rating system that will rank schools based on their graduation rates, tuition, student debt, and average earnings of graduates. The President suggests that this plan is a response to the rising costs of colleges and the accrued debt that is resulting. He noted that “a higher education is the single best investment you can make in your future,” further stating that debt has become “a barrier and burden for too many American families.” What President Obama failed to mention was the efforts that you can make to help prevent your children from facing future college debt.

In the spirit of future of “college rating systems,” consider a 529-plan as a took to keep your children out of debt!

A 529 college plan is a tax-shelter for tuition savings. It allows you (or really, anyone) to contribute to an account to save for a designated person’s college education (it can be anyone, including yourself), and is not subject to federal taxation. The money in the plan can be used for any qualified expenses associated with college, including room & board, books, fees, computer, internet, etc. There is no age limit for when the plan can be used, and it can roll over to another family member. You can maintain control, and appoint a guardian/trustee to manage it upon death. So not only do you avoid tax on withdrawals, but any capital gains are tax-free as well. NOTE: you have to keep in mind that any amount that you put in the 529 plan can be considered a “gift” for transfer tax purposes. However, the “annual exclusion” for the year 2013 (this amount changes every year), allows anyone to can make up to $14,000 in gifts that are excluded from transfer taxes (which are collected upon death, and subject to an exemption that is currently in the amount of $5,250,000).

While congress is deciding whether to support this new college rating system, make your own determination on how you are going to contribute to the debt-free-college-America! For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation.

It’s a Wild world. Are you protected?SM