Higher Education Savings and Planning: Tax and Nontax Considerations by Philip Manns and Timothy M. Todd (Nov. 6, 2019)

Philip Manns and Timothy Todd have made their paper, Higher Education Savings and Planning: Tax and Nontax Considerations, available for download. This article was published as a part of the Texas A&M Law Review. The abstract of this article, available on SSRN, reads as follows:

Funding higher education is among the critical financial decisions made by individuals and families. There are myriad options. Yet, the conventional wisdom — namely using Section 529 Plans — may not be the optimal vehicle to effectuate this goal. Therefore, this Article discusses various strategies to plan, save, and pay for higher education. It compares various savings methods including gifts, UTMA accounts, Section 529 Plans, trusts, and other vehicles. The analysis explores both tax and non-tax considerations, including the effect of different strategies on financial aid, transaction costs, investor control, income taxes, gift and estate taxes, flexibility, and creditor protection.

This Article concludes that the ubiquitous Section 529 Plan may not be as effective as conventional wisdom suggests. Indeed, we argue that Section 529 Plans are optimal only when capital can be exclusively committed to education funding, which may not be the most desirable savings tactic for a wide swath of American families who need to plan for other financial needs (e.g., retirement and unforeseen medical needs).

To see full article, click Higher Education Savings and Planning: Tax and Nontax Considerations.

Posted by Katie Thompson, Assistant Editor of the Wealth Strategies Journal.

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