What is an educational trust fund?
As grandparents, you want to see that your grandchildren, and their children down the road, have the funds needed to pay for higher education. In today’s competitive job market, having a college or graduate degree can set you apart. Most families agree that education is a top priority, but rising education costs have made higher education unaffordable to some. Parents and grandparents in Florida with a high net worth are advised to consider creating an education trust to support the educational costs of generations to come
Educational Trusts in Florida
An educational trust is a type of trust which specifies the funds within it are to be used for education. As the trust creator, you will name a trustee and beneficiaries within the trust document and specify how funds are to be used. Once the trust is drafted, you can fund the trust by transferring property to it.
Educational trusts have several benefits over college savings plans, particularly for grandparents with multiple grandchildren. State-administered college savings plans, like a 529 plan, are easy to set up, but they come with limitations. You can only contribute $28,000 a year per child and funds may reduce a child’s eligibility for financial aid. Grandparents wishing to finance the education of several grandchildren or future generations that have yet to be born will often be better served setting up an educational trust.
Setting Up Your Educational Trust
Once you have decided to create an educational trust, there are several critical questions you must consider. You will need to decide when the trust will take effect. If the beneficiary is not likely to need the funds until after your death, then it may make more sense to have the trust become active when you die. You will then need to choose a trustee, who will exercise a significant amount of control over the trust fund. Your next decisions will involve the beneficiaries. You can set up your trust to provide for each beneficiary individually or create a pot that can be distributed as needed to multiple beneficiaries.
An educational trust is one of the greatest gifts you can give to your children, grandchildren, and future generations. Contact a Florida estate planning attorney as soon as possible to explore your trust fund options.