When planning your estate, you may want to leave funds for a beneficiary’s college education. After all, secondary education is extremely beneficial in today’s day and age. If you’re unsure if this is a possibility or how to go about this process, you’ll want to keep reading. You’ll discover how you can help fund a loved one’s college tuition and why it’s essential to ensure you have the help of a Pasco County, FL wills & trusts lawyer to assist you through this process.
What Kind of Trust Can Pay for a College Tuition?
Generally, many rely on the state-run 529 college savings plan. While this has benefits, it also has a significant number of drawbacks. As such, you should consider establishing an irrevocable trust to help pay for the college tuition of a loved one.
If you establish an irrevocable trust, you cannot change or alter it after it has been created. This means that it is shielded from creditors and lawsuits, which guarantees that the funds will go to the beneficiary named in the trust. As the creator, you can load up to $75,000 into the fund upon its creation per beneficiary. These funds are then used to make qualified transfers to the institution to pay tuition.
What Are The Benefits of Using a Trust Fund?
When considering which option to set up, a 529 plan may be the first option you consider. While there are benefits, one of the main drawbacks is that this fund can only be used toward education. Similarly, a 529 plan is subject to change, meaning the owner of the plan can change it at any time. This means the intended beneficiary may not receive the funds they thought would be left to them.
An irrevocable trust, on the other hand, can be structured in a way that helps cover other expenses, should they arise. For example, if any medical expenses occur for your beneficiary, the funds can help fund this expense to care for the beneficiary. Again, this cannot be changed, meaning you are ensuring that the beneficiaries can use the funds allotted to them.
One of the significant benefits of an irrevocable fund is that you can transfer $17,000 directly to the institution without incurring the annual gift tax or contributing toward the lifetime exemption.
If you do not use all of the assets and funds in the trust, they remain there for your use. This means they are continually shielded from creditors and unhealthy spending habits.
When you’re ready to establish a trust fund, the Law Offices of Matthew J. Jowanna can help. Our dedicated legal team understands the complexities of this process and will do everything possible to ensure the trust you establish will reflect your wishes. Contact us today to learn more about how we can assist you.