Although not common knowledge, most 529 plans allow for a trust to be the account owner of the 529 savings plan and this type of structure can provide many benefits.
Advantages of Putting a 529 Account Inside a Trust
In addition to permitting the proceeds of a nonqualified distribution to be held and protected in a Kiss Trust for the beneficiary, trust owned 529 accounts have the following advantages:
Account Owner Succession – A Kiss Trust owned 529 savings account solves the problem of providing for a successor account owner if the account owner becomes disabled or dies. The successor trustee would automatically become the successor account owner.
No Diversion of Funds – With an individually owned 529 savings account, someone other than the donor may become the account owner if the donor becomes unable to act. The successor account owner could distribute the funds to himself, depriving the beneficiary of the funds. There is no apparent fiduciary duty imposed on an individual account owner to use the funds only for the beneficiary’s best interests. However, with a trust-owned 529 savings account, fiduciary duties would prevent the trustee from making any unauthorized distributions.
Creditor Problems – Even if state law does not protect the 529 savings account from the beneficiary’s creditors, the Kiss Trust’s spendthrift clause protects the trust assets from the beneficiary’s creditors.
See Kiss Trust reviews and what the press is saying about Kiss Trust.
KissTrust is a registered trademark of Eastern Point Trust Company.
Kiss Trust is a trademark of Eastern Point Trust Company.
The Kiss Trust concept is patented.