Education provisions in trusts

If you or a family member is interested in setting aside money toward the education of your children, grandchildren or other heirs, a living trust or an irrevocable trust can provide you with some options. Educational clauses can be created and put into trusts and they can work in different ways based upon your wishes or the needs of the circumstances.

According to Zacks, there is a lot of flexibility in how these clauses are crafted. Some can be relatively generic, simply stating that funds are to be used toward the education of a particular person. The trustee can even be given discretion as to how to use the funds. This can be helpful in the event that the money is needed for medical or other purposes instead of education.

Education clauses can be more specific as well. For example, you can indicate a maximum amount to be put toward the education each year or in total. You can tie the contribution to the student’s performance, requiring the achievement and maintenance of a certain grade point average. You can also indicate whether or not money is allowed to be used books, housing or other expenses.

An irrevocable trusts offers a tax-free option where you fund the trust with gift tax exclusion dollars and it can be withdrawn sans taxes if used for educational purposes specifically. You can learn more about trusts in Florida and how to provide for heirs’ education through this estate planning tool at our page discussing different types of trusts.


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