Cookies, Love, and Money for College

Physician's Money Digest, January 2006, Volume 13, Issue 1

Money

Today's grandparents give more thanjust $20 in a birthday card to their grandchildren.With 70% of the country's wealthcontrolled by the 50-plus generation,grandparents are in a better position thanever before to contribute to expensive upbringingnecessities such as braces andcollege. According to , unless parentsare savvy and work together withgrandparents, financial aid problems andtax issues may arise. For items such asbraces, generous grandparents should payorthodontists directly. If they wish to contributeto a future college education,grandparents should open a 529 savingsplan in their grandchild's name. Annualgift-giving allows grandparents to movemoney out of their estate without paying agift tax. What's more, grandparents cancontribute 5 years worth of contributionsin a single year without alerting the gift-taxpolice, but should first check the capon their state's 529 plan. Keep in mind thatif the grandchild is of college age andapplying for financial aid, their chances ofreceiving help could be hurt if significantfunds are found in the grandchild's name.Students should wait to receive their financial aid package, and then ask Grandma towrite a check directly to the school tomake up the difference.