Contributions to an account are considered a gift from the contributor to the designated beneficiary and are generally excludible from the account owner’s taxable estate. Amounts in an account at the death of the beneficiary are includible in the designated beneficiary’s estate.
An account owner’s contributions to an account are eligible for the annual gift tax exclusion, which is currently $14,000 per donee. 529 plans also allow for a special gift tax exclusion election. In general, this rule allows you to contribute up to $70,000 for each beneficiary in a single year without federal gift tax consequences—provided that you make no other gifts to the beneficiary in the same year or in any of the succeeding four calendar years. This election needs to be made on a federal gift tax return. Under this rule your contributions are subject to being added back into your taxable estate in the event of your death within the five-year period. You should consult your tax advisor regarding your situation.