<p>This is my understanding:
Parents of kid do not have to count funds controlled by grandparent.
Depending on the state, it is to everyone’s advantage for parents and grandparents to have separate 529s since some contributions can be deducted.
The contribution to the 529 can count a gift to the kid being funded - limit to $12.5K if you give nice birthday and Christmas gifts.<br>
Money in 529 may be tapped before Medicaid, but it also bypasses estate.
You can pay tuition separately from 529 contribution as long as it is directly to the college.
I have heard nothing about withdrawals from 529s being taxable as income. That would make them not a good idea.</p>