How to Leave Money to Your Heirs for CollegeFriday, January 31st, 2020, 9:01 am
If you have a good amount of money or other assets, you likely want to make certain your heirs receive this inheritance and use it in a way that helps them get ahead in life. However, if you simply leave them your assets in a will, they can legally do whatever they want with the money. You have absolutely no control over how it’s spent. That’s why many people create trusts instead. If you want your heirs to use their inheritance to cover the cost of their college tuition, you’ll need to create such a trust.
How it Works
The trust will be supervised by a trustee, someone you hand-pick to control the assets. While you may be tempted to select a relative or a close friend to serve as the trustee, it’s often better to hire a professional such as your accountant or lawyer. This way, you know they will truly keep your wishes in mind and approach the situation impartially. If you were to appoint your child to serve as a trustee of your grandchildren’s trust, they could give your grandchild the money to use on other things if they wanted.
Another option is to create a trust that pays out at specific intervals. For example, the trust could pay a certain amount of money to the heir at the beginning of each college semester to cover their costs. You will still have to appoint a trustee, but their job is easier. The trustee in this case doesn’t have to make decisions regarding when or if the heir receives money.
With an incentive trust, these payouts are dependent on the heir being in college. They will need to submit tuition statements or other proof that they have enrolled in courses. The trustee will need to verify this information and could even need to challenge the heir should they attempt to receive money without fulfilling the terms of the trust (such as by enrolling in classes, getting the money, and then dropping out).
If you want to set up an incentive trust that will help your heirs pay for college, we can help. Contact the offices of Michael F. Kanzer & Associates to schedule a free consultation.