How do I create a trust for college living expenses (and is it worth it)?

Asked over 1 year ago - Sammamish, WA

We have some education-only investments for our kids, but we want to put aside some money as living expenses for them, not directly tied to education. They are 16 and we don't expect them to "blow through it" when they turn 18, but we want to be sure they can't, just in case. Someone mentioned the possibility of creating a trust? How would we do that and what roughly would the costs be -- tens, hundreds, thousands? It's not worth it to us if it would cost a lot because the other option is to forego the tax benefits of kiddie accounts and just keep the money in our name and hand it out semester by semester. Thanks!

Attorney answers (4)

  1. Steven M Zelinger

    Pro

    Contributor Level 20

    8

    Lawyers agree

    Answered . Are you worrying about after your death(s)? Or is the intent to set this up while you are alive for use while you are alive? If it is the former, you should have your basic estate planning done to handle this. If it the latter, it probably makes little sense to shift money to an account that will just be taxed at trust rates. I would sit down with an estate planning attorney and/or financial advisor to review your options but I believe you may be over-thinking things.

    This is not legal advice nor intended to create an attorney-client relationship. The information provided here is... more
  2. Joseph Franklin Pippen Jr.

    Pro

    Contributor Level 20

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    Lawyers agree

    1

    Answered . I think I will give you my "if it was me answer" instead of a legal answer.
    I would keep the money in my name, maybe in a separate account, for
    college expenses instead of transferring it to them or an Educational trust etc.
    I would create a living trust and distribute the money to them at 25 but allow the trustee
    to pay all college related costs of living expenses if you pass away.
    This way you will always be in control of the money and also have a plan for their future.

    The answer given does not imply that an attorney-client relationship has been established and your best course of... more
  3. Charles Adam Shultz

    Contributor Level 19

    6

    Lawyers agree

    Answered . I think you would be wise to meet with an estate planner. There are too many what ifs and variables that go into answering your question.

    Depending on how much you are talking about, gifting them a monthly allowance at college may be more prudent, efficient and less expensive.

    The general advice above does not constitute an attorney-client relationship: you haven't hired me or my firm or... more
  4. Thomas A. Mackin

    Contributor Level 16

    4

    Lawyers agree

    Answered . You can get a living trust or educational trust drafted and started for about $1000.00 or even less. Choosing what kind of trust to use is up to you. There are some differences which effect taxes but the decisions are relatively simple, as is the process. I notice you are in Sammamish, feel free to give me a call. You can get my contact info through "Find a Lawyer" on this site.

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