Some people in Florida who can afford to do so wish to set aside part of their estate to provide education-related funds for children or grandchildren. There is no one "right way" to achieve this goal. However, there are several options available for individuals looking to give future generations a chance to pursue and achieve their preferred higher learning goals. Possibilities include setting up a trust all designated beneficiaries can dip into and establishing separate trusts for each child or grandchild that's a beneficiary.
Trusts can be an appealing option for this type of estate planning since there is so much flexibility with terms and conditions that can be set for loved ones. If a single trust for all children or grandchildren is preferred, what's termed a "pot trust" can be set up. This is simply a type of trust that sets aside a specific sum of money all beneficiaries can request funds from.
Since pot trusts often allow for unequal distributions, there are some potential drawbacks. For instance, one grandchild may opt for a more expensive school that results in fewer funds for other beneficiaries, or there may be a significant gap in ages that results in most of the available funds being used up before the youngest beneficiaries are ready to go to college. Potential problems like this may be avoided with separate trusts for each beneficiary since the same amount of funds can be set aside for each one. Another option is to use 529 plans and similar educational devices.
The type of estate planning that's best for educational trusts will depend on client priorities and preferences. Even with a 529 plan that limits the ability to dictate terms for distributions, an attorney may be able to make appropriate adjustments if circumstances change. With pot trusts, a lawyer might include terms with the trust that minimize the risk of funds being depleted before all beneficiaries have a chance to claim what's needed for their education-related expenses. An attorney may also make attempts to settle disputes that may involve how the designed trustee handles distributions and fund requests.