You have significant assets that you want to leave to your heirs, but you know that everyone in your family is not as prudent about how they spend their money as you are. You worry that they will spend it on things you would never approve of and otherwise waste the money you have been putting aside for your entire life.
On top of that, you know that you got a lot out of going to college when you were younger. You relished learning and education. You enjoyed the experiences you had, like traveling the world and making friends from different walks of life. College molded you into the person you are today, and you want to pass that on to your heirs.
An educational trust fund
The best way to do it may be to set up an educational trust fund, instead of leaving the money to your heirs. For instance, perhaps you had two children and they both had two children of their own. You want to leave the money to your four grandchildren so that they never have to worry about rising tuition costs.
By putting it in the trust, you make sure that it really does go toward education. You can lay out exactly how the child can use it. This could include paying for tuition, books, room and board, necessary travel expenses, school supplies and other costs. It's all up to you. If you want, you can say that it is for tuition and nothing else, but many people like to add some flexibility because they know that college comes with additional costs.
Who runs the trust?
So, who runs the trust? Who makes sure that it really goes to education, that a teenage grandchild does not take the money and buy a car or go on vacation?
You can pick a trustee. The child does not run the trust on their own. Typically, people choose another grandparent, a parent, a close relative or a family friend. You really do have the freedom to pick the person you think would be best at the job, whether that person is a professional, a family member or someone else close to you.
The key is to discuss the duties extensively with this person. An educational trust may need to make small payouts every few months for years on end. It's a big responsibility. It has a drastic impact on your heirs' futures. Make sure you get the right person.
Setting it up
As you move forward and create the educational trust, you need to know all of the proper legal steps to take. This ensures that the trust holds up and that your money gets used as intended.