If you’re starting up a trust focused on your heir’s education, you’re probably thinking about the cost of college. Many people use a trust like this as part of their estate planning to ensure that the money they leave behind is actually used for college tuition, rather than anything else.
But what types of costs can your heir use this trust to pay for? What is covered under an educational trust?
There are a wide variety of potential costs for an education
The thing to remember is that tuition is not the only cost that your heir is going to face. In fact, if they get a lot of financial aid or obtain grants and scholarships, the tuition may be the last thing they’re worried about. But that doesn’t mean there are no costs. Other costs of going to college could include things like:
- Transportation and parking passes
- Books and school supplies
- Room and board
- Utilities in a living space
- Additional educational costs, such as school trips
It may also be wise to consider specifying in the trust that the money could be used for different types of education. Not everyone goes to a four-year college. Maybe your heir wants to do an apprenticeship or go to a trade school. Maybe they’re interested in online learning options. You want to give them some flexibility so that they can use the money for the type of education that they desire and so that they can cover all of the costs that they have, while still making sure that they are not simply frivolously using the money in ways that you wouldn’t support.
As you work through this process to create the right trust for your family, be sure you know about all the legal steps you’ll need to take.