Is a Stand-Alone Educational Trust Right for Your Beneficiaries?

Are you in the midst of estate planning for your loved one and are concerned about their educational futures? A 529 Plan sounds attractive, but doesn’t it mean your child or grandchild can only attend specific schools in Florida? How much will college cost in ten or fifteen years? While a 529 plan is a smart investment vehicle for educational needs, a stand-alone education trust is another method to provide for the educational costs of beneficiaries while you are still living or after your passing. 

What is an Education Trust?  

An Educational Trust is designed specifically to meet the needs of parents and grandparents wishing to provide for a child’s educational needs. Education Trusts are irrevocable, meaning once created and funded, funds can not be withdrawn by the grantor. And funds can only be withdrawn by the beneficiary based on the language of the trust. For example, you could set up your child’s education trust to become operational once they enroll in their first semester of college, or the week after they graduate high school. An Educational Trust gives the grantor piece of mind knowing their child or loved one’s education is provided for, at least in part, and that their child won’t be saddled with student loan debt at exorbitant interest rates. Establishing an Educational Trust also ensures your beneficiary won’t spend an inheritance on frivolous items, but instead to further their academic career. Educational Trusts are designed to enhance a 529 Plan by providing an administrative vehicle for the plan. The trust dictates how and when 529 investments can be withdrawn, and can be administered so that more than one child can benefit from funds contributed to the 529 Plan. There are also tax benefits to contributing money to the 529 Plan and using a trust as opposed to making a cash gift to your beneficiaries.

What about Florida 529 Plans?

A Florida 529 Plan is a savings account designed specifically for higher education costs. It is an investment account that allows parents and guardians to make tax-free contributions to the account for their child. Accounts are only available to Florida residents, and if withdrawals are made for non-educational purposes, the income is taxed. Participants in the plan can choose what investments they want for their portfolio or use a pre-designed portfolio. All investments are backed by the Florida Prepaid College Board. Even if parents move out of state, they can continue to contribute to the Plan, and funds can be used at many universities throughout the country. Parents can also use funds to pay for K-12 private and parochial tuition. Parents can also set up a gifting option allowing grandparents and relatives to contribute a gift to the child or children to save for college expenses.

Call the Millhorn Elder Law Group Today

If you want to provide for your child or grandchild’s education but aren’t sure how to get started, or if you have questions about the Stand-Alone Education Trust, call estate planning attorney Eric Millhorn at the Millhorn Elder Law Group. Conveniently located in The Villages, Attorney Millhorn exclusively practices in elder law including the preparation of standard trusts and advanced estate planning. Schedule a consultation today.

Resource:

myfloridaprepaid.com/savings-plan/

https://www.millhorn.com/just-how-strictly-must-you-comply-with-will-formalities/