Generally, saving money for education is an option that you can’t live without. If you haven’t initiated any kind of savings for college, start putting some away now. One the popular saving-education path that you can take is to create a Coverdell Education Savings Account (ESA). This account is sort of a custodial account or a trust fund that the bank or any financial entity can arrange. This is valuable for families especially those in the higher tax brackets, contributing a maximum of $2,000 per child on a yearly basis.

One benefit of this account is that the contributions are not tax deductible yet they grow tax free. Though you can invest them in any way you want, withdrawals are approved for qualified educational expense only. They can be for tuition, uniforms, transportations and the like and they can also include those elementary and secondary school expenses. Another advantage is that you can change the beneficiary without cost or penalty. Also, if the parent is the owner of the Coverdell account, it is treated as an asset of the parent for financial support purposes in the federal level. On the flip side, the account only holds $2,000 contribution per year and these contribution will halt if the beneficiary reaches 18 years of age or the account will close if the beneficiary reaches 30 years old, unless it’s for someone with special needs. It’s equally important to note that withdrawals from the account for something that doesn’t meet the qualified education expenses can leave you penalized and duly taxed.