Sandy Springs Estate Planning for Scholarship or Education Funds

Many Sandy Springs families work hard to build wealth, and one of the most meaningful things you can do with that wealth is fund a child’s or grandchild’s education. Whether you want to set aside money for college tuition, private school, or even a scholarship fund that outlasts you, estate planning gives you the tools to do it right. At Atlanta estate planning lawyer Slowik Estate Planning, we help families in Sandy Springs and throughout the Atlanta metro area create education funding strategies that are tax-smart, legally sound, and built to last. Our office is located in Atlanta, Georgia, and we are ready to help you put a real plan in place.

Table of Contents

• Why Education Planning Belongs in Your Estate Plan
• Georgia’s Path2College 529 Plan and Its Estate Planning Benefits
• Federal Gift Tax Rules and the Direct Tuition Payment Strategy
• Using Trusts to Fund Scholarships and Education for Future Generations
• Estate Tax Planning and Education Funding for High-Net-Worth Sandy Springs Families
• FAQs About Sandy Springs Estate Planning for Scholarship or Education Funds

Why Education Planning Belongs in Your Estate Plan

Education is one of the most expensive gifts you can give a child. College costs have risen steadily for decades, and private K-12 tuition in the Atlanta area can run tens of thousands of dollars per year. Families near Buckhead, Dunwoody, and Sandy Springs know this reality firsthand. Without a formal plan, education gifts can trigger unexpected tax bills, create family conflict, or simply fall short of what you intended.

A well-designed estate plan ties your education funding goals directly to your broader wealth transfer strategy. You can use trusts, 529 accounts, direct tuition payments, and other tools to move money to the next generation in a way that reduces your taxable estate while keeping you in control. These are not separate financial decisions. They work together, and treating them as a unified plan produces better results.

Georgia does not impose a state-level gift tax or estate tax, which gives Sandy Springs residents a meaningful advantage. Federal rules still apply, but Georgia’s tax environment makes it easier to transfer wealth for education without the added layer of state tax exposure that residents in other states face. That said, federal gift and estate tax rules are detailed, and getting them wrong is costly. A clear plan, reviewed by a qualified attorney, protects both your assets and your family.

Think about what happens if you leave a lump sum to a minor grandchild without any structure. Under O.C.G.A. Title 53, Chapter 2, intestate distribution rules govern how assets pass when there is no plan in place, and those rules do not account for your education goals. A properly drafted trust or a designated 529 account ensures your wishes are carried out exactly as you intend, not by default.

Georgia’s Path2College 529 Plan and Its Estate Planning Benefits

Georgia’s Path2College 529 Plan is one of the strongest education savings tools available to Sandy Springs families, and it carries real estate planning value. Georgia residents can take a state income tax deduction of up to $10,000 annually per beneficiary for joint filers under the College Success 529 Expansion Act (Georgia SB 266), effective for tax years beginning on or after January 1, 2026. Single filers can deduct up to $5,000 per beneficiary per year. This deduction requires no itemization, making it accessible to most families.

Investment earnings are 100% free from federal and Georgia state income taxes when used for qualified education expenses. That tax-free growth compounds over time, especially if contributions begin when a child is young. A family near Perimeter Mall or along GA-400 who starts saving at birth can accumulate significant funds by the time a child reaches Georgia Tech, Emory, or any other qualifying institution.

529 assets are excluded from the donor’s federal taxable estate, making them a smart tool for reducing the taxable estate while still retaining control of the funds. Since the gift and estate tax exemptions are combined, any contributions exceeding the annual exclusion will reduce the amount shielded from estate taxes. For most Sandy Springs families, this means you can shift meaningful wealth out of your estate while keeping the ability to change the beneficiary or redirect funds if circumstances change.

The SECURE 2.0 Act now permits $35,000 in lifetime rollovers to Roth IRAs, while the One Big Beautiful Bill Act (signed July 2025) doubles the K-12 withdrawal limit to $20,000 starting January 2026 and expands qualified expenses to include tutoring, test fees, educational therapies, and vocational and professional credentialing programs. This flexibility makes the 529 plan a much more versatile tool than it was just a few years ago. If your child earns a full scholarship or decides not to attend college, the money is not trapped.

Federal Gift Tax Rules and the Direct Tuition Payment Strategy

Understanding the federal gift tax rules is essential before you start writing checks for tuition or funding education accounts. The rules are more favorable than most people realize, and using them correctly can move substantial wealth out of your estate without any tax cost.

The federal gift tax generally applies when a gift exceeds the annual exclusion amount, which is $19,000 per recipient in 2026. Married couples who elect gift-splitting can give $38,000 per beneficiary per year without filing a gift tax return. For a grandparent with several grandchildren attending school near Sandy Springs or across the Atlanta metro, these annual exclusions add up quickly.

There is also a powerful strategy that goes beyond the annual exclusion. Under IRC §2503(e), there is an especially powerful exclusion for transfers made directly for educational expenses. This provision covers amounts paid directly to an educational institution for tuition. Payments made directly to educational or medical institutions are unlimited in amount, benefit an unrestricted number of individuals, and generally do not require gift tax reporting. This means you could pay $60,000 in tuition directly to a university for a grandchild and still give that same grandchild a separate $19,000 gift in the same year, all without gift tax exposure.

One important rule: the payment must go directly to the institution. The payment must be made directly to the institution, not to the individual, for reimbursement. Reimbursing a student for tuition they already paid does not qualify. This is a common mistake, and it is easy to avoid with proper planning.

For families who want to make a large lump-sum contribution to a 529 account, the “superfunding” strategy allows you to front-load five years of annual exclusions at once. This option allows you to contribute up to five times the annual exclusion in a given year ($95,000 in 2026) and elect to spread the gift evenly over five years. A married couple can contribute $190,000 to a single beneficiary’s 529 account in one transaction. The contributor must file Form 709 in the contribution year, and if the contributor dies during the five-year period, a prorated portion returns to their estate.

Using Trusts to Fund Scholarships and Education for Future Generations

A 529 plan works well for funding a specific child’s education. But what if your goal is bigger? Some Sandy Springs families want to create a lasting scholarship fund, support multiple generations of children, or ensure that education funding continues long after they are gone. A properly structured trust is the right tool for that goal.

An irrevocable trust can hold assets designated for education and distribute them to beneficiaries who meet criteria you define. You can require that funds be used only for tuition at accredited institutions, limit distributions to direct descendants, or tie distributions to academic performance. Working with a qualified trust attorney ensures the trust language is clear, enforceable, and aligned with Georgia law under O.C.G.A. Title 53.

One important federal consideration for trusts that benefit grandchildren or later generations is the generation-skipping transfer (GST) tax. When a grandparent contributes to a child’s 529 plan or a trust, the federal generation-skipping transfer tax may apply. The GSTT is an additional tax on transfers made during life or at your death to someone more than one generation below you, such as a grandchild. The GSTT exemption is $15,000,000 in 2026, which means most families will not face this tax. Still, for high-net-worth families in Sandy Springs, proper GST planning is part of any serious generational education strategy.

Some families also consider a Health and Education Exclusion Trust (HEET). For high-net-worth clients who want to benefit grandchildren or future generations, planners sometimes recommend a HEET. This type of trust is primarily a GST-tax savings vehicle that takes advantage of IRC §2503(e). Under IRC §2611(b)(1), transfers that qualify under IRC §2503(e)(2)(B) are excluded from GST tax, meaning that distributions from a non-GST-exempt trust directly to educational institutions for skip persons like grandchildren are not subject to GST tax. A HEET can be a powerful option for families who have already used their GST exemption or who want an additional layer of planning.

Trusts also offer protection that outright gifts and 529 accounts do not. Assets held in a properly drafted irrevocable trust are generally shielded from a beneficiary’s creditors. If a child faces financial trouble later in life, the education funds remain protected and available for their intended purpose.

Estate Tax Planning and Education Funding for High-Net-Worth Sandy Springs Families

For Sandy Springs families with larger estates, education funding and estate tax planning go hand in hand. The One Big Beautiful Bill was signed into law on July 4, 2025, as Public Law 119-21. It increases the basic exclusion amount to $15,000,000 for calendar year 2026. Married couples now have a combined federal estate tax exemption of $30 million. That is a generous threshold, but it is not permanent, and high-net-worth families should plan now while these exemptions are in place.

Systematic education gifting is one of the most efficient ways to reduce a taxable estate over time. Consider a couple with four grandchildren attending schools in and around Atlanta. By contributing $38,000 per year to each grandchild’s 529 account, they remove $152,000 from their taxable estate annually. Over ten years, that is $1.52 million transferred tax-free, all growing toward education expenses. When you add direct tuition payments under IRC §2503(e), the numbers grow even larger without any gift tax exposure.

Under IRC §2036, assets transferred to a trust where the grantor retains control or the right to income may be pulled back into the taxable estate. This is a critical reason why irrevocable education trusts must be structured carefully. Retaining too much control over the trust defeats the estate-planning purpose. An experienced attorney ensures the trust is designed to accomplish your goals without triggering unintended estate tax inclusion.

Coordinating your education funding strategy with your broader estate plan, including revocable living trusts, powers of attorney, and healthcare directives, creates a complete picture. Working with an estate tax planning lawyer who understands both the federal rules and Georgia law means your education funding plan fits cleanly within your overall wealth transfer strategy. At Slowik Estate Planning in Atlanta, Georgia, we help Sandy Springs families build plans that work across every dimension of their estate.

FAQs About Sandy Springs Estate Planning for Scholarship or Education Funds

Can I set up a scholarship fund through my estate plan in Georgia?

Yes. You can establish a charitable scholarship fund through a private foundation, a donor-advised fund, or a charitable trust. Under IRC §2106, contributions to domestic organizations operated exclusively for educational purposes, where no private earnings inure to individuals, qualify for favorable tax treatment. Slowik Estate Planning can help you structure a scholarship fund that meets IRS requirements and reflects your values. Charitable education funds can also reduce your taxable estate when properly structured.

What happens to a 529 account if the beneficiary does not use the funds?

You have several options. You can change the beneficiary to another qualifying family member, leave the funds in the account since there is no expiration date, or roll up to $35,000 of the account balance into the beneficiary’s Roth IRA over their lifetime, subject to annual limits and a 15-year holding requirement. Under the One Big Beautiful Bill Act signed in July 2025, qualified expenses were also expanded, giving you more ways to use the funds tax-free. A qualified attorney can help you plan for these contingencies in advance.

Is there a Georgia state tax deduction for contributing to a 529 plan?

Yes. Under Georgia’s College Success 529 Expansion Act (SB 266), effective for tax years beginning January 1, 2026, married couples filing jointly can deduct up to $10,000 per beneficiary per year in contributions to Georgia’s Path2College 529 Plan. Single filers can deduct up to $5,000 per beneficiary. This deduction does not require itemization and applies only to contributions made to Georgia’s in-state plan. Out-of-state 529 plans receive no Georgia tax benefit.

How does paying tuition directly to a school differ from contributing to a 529 plan?

Paying tuition directly to an educational institution qualifies for an unlimited gift tax exclusion under IRC §2503(e). There is no cap on the amount, and it does not count against your annual $19,000 gift tax exclusion or your lifetime exemption. A 529 contribution, by contrast, is treated as a completed gift and is subject to the annual exclusion rules, though the superfunding option lets you front-load five years of exclusions at once. Both strategies have a place in a complete education funding plan, and the right choice depends on your specific goals and estate size.

Should I contact Slowik Estate Planning to create an education funding plan?

If you want to fund a child’s or grandchild’s education in a tax-efficient way, or if you want to create a lasting scholarship fund as part of your legacy, working with a qualified estate planning attorney is the right step. Slowik Estate Planning is based in Atlanta, Georgia, and serves families throughout Sandy Springs and the greater Atlanta area. We help clients design education funding strategies that fit their broader estate plans, taking into account Georgia law, federal gift and estate tax rules, and your personal goals. Contact us to schedule a consultation and start building a plan that works for your family.