How Can I Ensure My Children Can Afford College if Something Were to Happen to Me?

The in-state cost of attendance at University of Florida is currently $24,180 per year and the cost of some private universities can reach nearly $100,000 per year. For a young child who won’t be attending for a decade or more, the price is sure to be even steeper. Many South Florida parents feel a responsibility to help their children pay for college to minimize the amount of debt they will shoulder as young adults. But, if something were to happen to you before your children were college-aged, how would your children pay this enormous expense?

Contacting an experienced Estate Planning attorney to develop a comprehensive estate plan is your best defense against unplanned events or situations. Creating a trust will likely be one of the key elements of your estate plan. A trust is a legal entity that can hold assets for safekeeping for your child. A trust can hold cash, investments, real estate, and nearly any other asset – tangible or financial.

You, as the grantor (or trustor is the person who funds the trust), will establish the rules for how funds should be distributed from the trust. For example, you could provide instructions allowing distributions from the trust for tuition, room and board, books, health costs, and other expenses associated with college. You could even specify if the funds can be used for spring break trips. In addition to covering college costs, you can decide if the trust funds can be used to cover other expenses your child may incur as a young adult, such as purchasing a car, wedding, or a down payment on a home. Many individuals also choose for additional distributions to occur at regular intervals based on their child’s age, such as permitting additional distributions at ages 25 and 30.  

As part of establishing the trust, you will name one or more trustees who will manage it. The trustee will be responsible for investing the trust funds, disbursing them according to your wishes, and paying all bills associated with the trust. It is crucial to you select your trustee with care, as they will be the one who has the authority to approve or reject the expenses that the trust will pay on behalf of your child. In some cases, it may be beneficial to name a trustee who is different from your child’s guardian, such as a different individual or a trust company who would provide professional money management services and more objectivity to the trust’s administration than a family member may be able to provide. Talk to your attorney for advice on your specific situation.

In addition to creating a trust to hold their existing assets, many parents also purchase a life insurance policy. You can name the trust as the beneficiary to ensure that there are sufficient funds in the trust to cover the cost of college and other expenses for your child.

If you have young children and are looking to help financially secure their future, contact the attorneys at Huth, Pratt & Milhauser in Boca Raton. We specialize in Estate Planning and Probate Litigation and have helped families throughout South Florida navigate the legalities of preparing for their children’s and grandchildren’s futures.