Providing for heirs with an education trust

Many people in Georgia are firmly committed to helping their children and grandchildren with their educations. Knowing that the cost of schooling has increased significantly over the past decades, these individuals often look for options that can provide funds for tuition and fees while also minimizing tax liabilities. One option is to start an education savings-specific investment account for one's descendants. The other is to establish an education trust.

Trusts allow people to designate assets for specific purposes during the estate planning process. This is particularly helpful when people wish to ensure that the money they provide to an heir or trust beneficiary is spent wisely and in accordance with the intention of the bequest.

Making the decision to set up a trust requires forethought and an understanding of financial options. For example, in some cases, it may make more sense to place funds into a Coverdell 529 plan savings account than into an educational trust. However, families with high assets may wish to contribute more to an education fund than what 529 rules allow.

Other considerations include determining the kind of leeway trust administrators have in approving the use of funds for specific educational endeavors. For example, the administrators may have to decide whether funds can be used to cover tuition for private grammar and high schools as well as college. Other decisions may be necessary if the beneficiary doesn't want to go to college or wishes to use funds for nontraditional educational activities, such as private music or art lessons. Another consideration is what should happen to funds that are left over after educational expenses have been covered.

An attorney may be able to create an estate plan that makes sense given a client's actuation and family dynamics. Good legal planning may can help ensure that beneficiaries are able to pursue their educational goals.

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