Imagine this scenario:

You’ve worked hard, saved and managed to accumulate some money. You’re not super wealthy by any means, but you’re comfortable. But your siblings haven’t fared as well and you want to make sure that their kids have the benefit of a solid education. With no children of your own, it’s what feels like the best thing to do.  

So you set up college education savings plans for your nieces and nephews, and mention everything in your will. And life goes on. You don’t give it another thought beyond making regular contributions. You move to another state. You divorce…the normal things of life.  

Of course you need to change the beneficiary of your estate and name a different executor (both are still your ex-spouse) but you never get around to it.

And then the unthinkable happens: you die unexpectedly, with no time to make those changes you intended to make.

This is where things can quickly fall apart for those nieces and nephews you really wanted to take care of. To make sure your wishes are carried out exactly as you intended, take these steps now to protect those college education savings plans:

1. Name One or Both of the Child’s Parents as Participant or Owner
If you name your niece or nephew as the “beneficiary” of the education plan as a gift, you must add one or both of the child’s parents as the participant or owner. This gives them actual control over the account.  

2. Update Your Will
If you undergo any kind of lifestyle change (i.e., divorce, death of a spouse or child, become incapacitated, move to another state, etc.), take the time required to have your will updated.
   
3. Don’t Leave Assets or Insurance Outright to Your Nieces or Nephews
If you leave either assets or insurance directly to underage nieces or nephews, their parents will have to go to court to gain access to these assets. This unnecessarily adds a layer of complexity and expense to the process.

4. Have Your Estate Planning and Financial Documents Thoroughly Reviewed
When you update your will, make sure that all your estate planning documents are reviewed, and that all of your accounts are coordinated and that all your documentation supports your ultimate objectives.
 
I can’t emphasize enough how important it is to have current estate planning documents. And this is especially true if you have college education savings plans set aside for nieces, nephews, great-nieces or nephews.     

Darlynn Morgan is an attorney, speaker, an auntie (and a mom!) Darlynn makes it easy for your family to talk about and plan for tough subjects like money, death and taxes. Visit www.MorganLawGroup.com for more resources on how to make sure the kids you love are totally protected if the unthinkable happens.