Some families are fortunate to have grandparents who are willing and able to assist with the cost of their grandchildren’s college expenses.  There are many ways to provide assistance. Which options are better for a specific family depend on several factors.  Some of the ways that grandparents can subsidize educational expense include direct payment of tuition to the institution.  Such payments are not considered gifts which apply toward the annual exclusion for Gift and Estate tax purposes and thus may be in addition to annual $14,000 transfers.  If a senior is feeling very generous, $14,000 gift transfers may be of appreciated securities to a grandchild, in a lower tax bracket than the donor, and may reduce the sting of income tax upon the liquidation of the investment.  Funding a 529 college savings account in their own name, a child’s name or the grandchild student’s name is an option when the student is young and the funds have time to grow before the student begins college.  Continue reading →