In today’s society, pursuing a higher level of education is important because it can lead to higher-paying career opportunities. However, pursuing higher education can be extremely costly. This makes many wonder whether they can use a trust fund to pay for their college education. If you are fortunate enough to have a loved one establish a trust fund to provide you with financial support after they’ve departed, depending on the type of trust it is, you may be able to fund your college tuition. Keep reading to learn what type of trust fund may be used to fund your college education and how a dedicated Montgomery County Trust Attorney can help you gain access to your trust fund for your post-secondary education.
What type of trust fund can fund my college education?
Nowadays, many people are choosing to create 529 plans to pay for qualified education expenses for their designated beneficiaries. Although 529 plans have several benefits, they also have limitations. This causes individuals to wonder whether they should establish a 529 plan or an irrevocable trust to help fund their beneficiary’s post-secondary education expenses.
If you have been named a beneficiary of an irrevocable trust you may be able to use the funds to pay for your higher level of education. An irrevocable trust is a trust where the grantor cannot alter or revoke the trust after it has been created. When a grantor creates an irrevocable trust, they can front load up to five years of annual exclusion gifts of up to $15,000 per year for your benefit. Essentially, this means they can set aside $75,000 per grantor. This means they can use these funds to make qualified transfers to fund your post-secondary education expenses.
What are the benefits?
There are several benefits to choosing a trust over a 529 plan when funding your post-secondary education. Firstly, 529 plans are used solely for educational purposes, while trusts can be used to distribute assets for other purposes such as long-term care and medical expenses. In addition, trusts can protect assets after a beneficiary’s post-secondary education has been completed. Funds will be protected from creditors and reckless spending. Ultimately, 529 plans have limited options, while trust funds can be used in different ways to invest. If you have been fortunate enough to be named a beneficiary of an irrevocable trust, you may use the funds to pay for your post-secondary education.
For more information on how you may be able to use a trust fund to pay for your educational expenses, please don’t hesitate to speak with one of our trusted Montgomery County trust attorneys. Our firm is committed to helping our clients in any way we can. Contact us today!