EVALUATING THE EDUCATION TRUST

If you are a parent, grandparent or other relative of a minor in Florida, you may wish to help with saving for that minor’s future college education. There can be many different ways of doing this. As you investigate your options, you may hear about education trusts. While these can be appropriate vehicles via which you can assist with facilitating higher education for a loved one, investing in them may or may not be the best choice for you to make.

According to 360 Degrees of Financial Literacy, the two types of education trusts are Crummey trusts and Section 2503(c) trusts. With a Crummey trust, the minor can take money from the trust over a set period of time and there is no age at which full distribution becomes required. In contrast, the child is mandated to take a distribution upon reaching the age of 21 with a Section 2503(c) trust. Until that time, the trust funds are managed by a trustee, as with other forms of trusts.

When evaluating education trusts, you should also give consideration to plans that offer shelter from taxes. In addition, you may be able to achieve many of the same benefits with lower startup and maintenance costs by creating a custodial account. Education trusts often require a large amount of money with which to be created and they can also be costly to keep up. Tax returns must also be filed with these trusts.

To learn more about what an educational trust is and how you can establish one, feel free to visit our estate planning website for Florida residents.

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Written by Luis E. Barreto

Luis E. Barreto

Luis is a probate and guardianship litigator with over 23 years of experience in the field. Determination of heirs, will contests, breaches of fiduciary duty, removal of personal representatives, guardians and trustees are just some of the types of litigation he addresses. In addition, he administers non-contested estates and guardianships.