Jason and I met with the financial services people today to set up her college savings fund and get the ins and outs of it.
Do your own research, but the 529 investment fund seems like a good bet to us. We put the money in (after taxes) and as long as the funds are used for a 'school' that is eligible for federal funding (college, trade schools, etc) the growth on our investment is tax free. Unlike the GET program where you purchase tuition credits, this fund allows for more flexibility of where the money can be used and it can be used for education related expenses - books, housing - that sort of thing.
If Lucy gets scholarship money we can pull out the same amount without a tax penalty. (NICE.) It can also be transferred to anyone we like, so if the child displeases us we can give the money to a better child.
In the car on the way home from the meeting Jason said "Maybe Lucy will be stupid and we can use the money to go to that culinary school in Italy that we were talking about." I wouldn't bank on that being the case, but maybe she will be so bright that colleges will be lining up to cover her expenses.
The bright spot (for me) is that the money people told us that if we invest $100 a month starting now, she should be fully covered for an in state university such as UW or WSU. If she "has" to go to Oxford in England then she'd better get cracking on the books as we're only planning on funding an in state education. It was nice to hear that we're not totally behind the 8-ball.