While parents and grandparents love spoiling children with physical gifts, many have found experiences to be more valuable. Gift-givers often love this approach because it not only helps to meet a need or create an opportunity for connection with those they love, it also allows them to invest according to their personal values of faith, family, community, stewardship, or education, too. These experiential gifts make a practical, memorable, and meaningful impact.
We’re going to dive deep into how you can create a lasting impact for your children and grandchildren, specifically through the experiential gift of education funding—with proven strategies designed to help high-net individuals maximize outcomes.
Looking at Education Through a Legacy Lens
Many parents and grandparents have a desire to help fund a loved one’s college education, but aren’t aware of the options available to them. Below, we’ll answer three common questions about education funding.
Question #1: I’ve heard of 529 plans, but are they my only option?
No, there are a variety of practical, tax-smart options for individuals hoping to fund an education account. The two most popular vehicles are Roth IRAs and 529 plans because they are effective options for transferring wealth. 529s are often a great fit because they provide numerous benefits including the potential for high investment returns, tax-deferred growth, and minimal impact on financial aid. The problem with 529s is that they sometimes present limitations for families who have significant resources, because they may not provide the flexibility, estate planning benefits, or control many families seek when supporting multiple generations. That’s why we often recommend exploring the following four alternative strategies for funding education:
- A Traditional Investment Account. Needs vary family to family. Some children will attend a four-year university, others will pursue a trade. If flexibility is your primary driver, a traditional brokerage account provides options. The downside of saving for college with this kind of account is that you will have to pay capital gains on the growth, but they can also be paired with a 529 plan to help minimize the impact. Some families use a “2 and 2” strategy: They save the first two years of college in a 529 plan where they can enjoy the tax benefits, and save the second two years in a non-retirement investment account to maintain flexibility.
- Family Trusts. By establishing a properly structured trust, you can earmark funds specifically for education while also reducing your taxable estate. A trust allows for more customization too. You get to define what qualifies as an educational expense, include values-based conditions, or designate support for trade schools, graduate studies, or continuing education—all under your family’s shared values and unique definition of success.
- Charitable giving. If your family is passionate about education access and equity, consider charitable giving strategies such as endowing a scholarship fund at your alma mater or community organization. These can be structured to align with your values—supporting first-generation college students, faith-based education, or specific fields of study.
- Legacy strategies. For individuals who like to consider their estate through a lens of wise stewardship, investing in education can become a meaningful part of the picture. Just like with family giving, charitable education gifts can offer significant income and estate tax advantages, especially when made through Donor-Advised Funds, charitable remainder trusts, or private foundations.
Question #2: How can I fund education while reducing estate taxes?
As we mentioned above, education funding can and should be part of a larger estate strategy, executed through a coordinated approach. For example, annual gift exclusions and lifetime exemption gifts can be directed toward educational expenses, either directly or through trusts. Tuition payments made directly to an institution are not counted toward your annual or lifetime gift tax exclusion—making this a valuable and underutilized tool. Coupling these strategies with grantor or irrevocable trusts can allow you to transfer wealth out of your estate while maintaining educational intent and control.
Question #3: How can I create a family education legacy?
Imagine being able to create an education fund that supports not only your children but your grandchildren, and great-grandchildren. That’s the heart of multi-generational education planning. It ensures your family values continue to guide decisions long after you’re gone.
One powerful vehicle is a dynasty trust, which can provide education funding for generations while keeping assets protected and within the family line. Another is the establishment of a private family foundation or philanthropic scholarship fund, which allows your family to give back in a way that reflects your values and priorities.
This approach isn’t just about financial provision—it’s about identity formation. You’re giving future generations not only the means to pursue their goals but also the story of why it matters to invest in learning.
A Personal and Purposeful Plan
In the end, education funding can be much more than a transaction—it can reflect what you value most. Whether you’re exploring how to save an educational fund with tax efficiency, looking for better options than a 529 plan, or thinking about building a generational legacy of learning, the most effective strategy starts with a conversation rooted in your values.
If you’re ready to give the gift of educational investment, contact Legacy Planning Advisors today to set up a meeting. Together we’ll explore how you can bless your loved ones, and empower them to learn, grow, and lead well.
This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2025 Advisor Websites.
