A 529 plan is a college account that grows tax-deferred. They are very powerful savings plans as they provide a great avenue to save up for college education for kids and even grandkids because they are tax-free, similar to an IRA.

Although these plans are very attractive, there is one thing that people have to check as part of their estate planning — whether or not there is a successor owner listed. This is something that people should be looking at throughout their 529 plan paperwork or asking a lawyer to take a look.

Why you should check if there is a successor owner listed

A successor owner can be considered as the backup owner of the 529 plan. They will have access to it and own the plan should the primary owner pass away. Without a successor owner, this asset will have to go through probate to appoint a new owner. This, in turn, creates an unnecessary expense on the part of the beneficiaries.

A successor owner is different from the beneficiaries, to which the asset will go to. And this is the reason why many people make the mistake of not listing one. So everyone with a 529 plan needs to check and make sure that they have a successor owner. It can be an adult child, a sibling, a spouse, uncle, aunt, or anyone that the owner of the 529 plan wishes to appoint.