You’re opening a CollegeAdvantage 529 plan for your child and you come across a section on the account application about successor owner information. What’s a successor owner, you wonder, and do I really need one? The recommendation is yes, as the account owner, you should choose a successor owner to ensure your plans will be followed if you are unable to make decisions for the 529 account.
Simply put, a successor owner is a person you designate that, in the event of your death or inability to physically or mentally continue the administration of 529 account, to become its new owner and assume all management of it. Having a successor owner should allow for an easy transfer of ownership of the 529 account and the continuance of the saving strategy you established for your child.
You may have discovered as you were filling in the account application that there can only be one 529 account owner. With married couples, usually the spouse who is not the account owner will be designated as the successor owner so the account management stays within the family.
A successor owner must be at least 18 years old. You should select someone who you absolutely trust will follow your preferences on the use of the account. Once the successor owner has control of the account, they will have the managerial powers and so can choose to change the beneficiary to a different member of the family of the preceding beneficiary, request a withdrawal, and switch the investment options in which the 529 is invested. Account ownership will be transferred to the successor only when the submission of documentation of death or disability has been accepted by Ohio Tuition Trust Authority. If you do not elect a successor owner for your 529 account, a probate court may end up designating one. If you do not select a successor owner, or if the successor owner does not survive the account owner, the assets will pass to the beneficiary, or if the beneficiary is not 18 years of age at the time, the person designated in the account owner’s will or by operation of law.
Since laws vary from state to state, you may wish to consult a probate lawyer to determine the precise effect of such a designation.
You may revoke or change your successor owner at any time. If a situation arises that you need to adjust this designation, you can fill in the appropriate section of the Account Information Change Form.
No one wants to consider a worst-case scenario but you’ll discover to that having the successor owner framework in place can only ease your mind that your 529 account will be directed as you would wish.