According to the College Board, the average tuition and fees for the 2025–2026 academic year are $11,950 for a four-year in-state public institution; $31,880 for a four-year out-of-state public institution; $45,000 for a four-year nonprofit private institution; and $4,150 for a two-year public institution. If postsecondary education is in your family’s future, the following tools can be excellent additions to your estate plan to help provide for education needs.
Gift Trust
A gift trust lets you hold and invest money or property for your chosen beneficiaries. While frequently used for education, this type of trust is flexible and can fund a variety of needs while providing significant tax advantages. You have the flexibility to contribute annually or pause your contributions at any time. A gift trust is typically set up such that the funds remain protected until they are needed for school. By including specific withdrawal rights (often called Crummey powers), you can take advantage of annual gift tax exclusions to systematically reduce your taxable estate without granting the beneficiary immediate, unrestricted access to the full principal. This approach allows you to use annual tax exclusions and plan ahead for future expenses without giving away complete control of the funds.
Provision in a Revocable Living Trust
If you have a revocable living trust, you can include a specific provision to fund a child’s or grandchild’s education, ensuring that they are supported even if you pass away before they finish school. A primary benefit of this approach is its flexibility. During your lifetime, you retain complete control to update the trust, dictate exactly how the funds are used, and define education expenses as broadly or narrowly as you see fit. You also are not required to dedicate all trust assets to education; any remaining funds can be allocated to other purposes of your choosing.
529 Plans
A 529 plan is a tax-advantaged savings plan designed to help families save for a child’s or grandchild’s future education.
Education savings plan. An education savings plan allows you to invest money tax-free for qualified education expenses. Funds can be used not only for tuition and fees but also for room and board, computers, books, and other supplies. Some plans can even cover certain expenses at some international institutions. In addition, as of 2026, up to $10,000 per beneficiary per year can be used for elementary or secondary school tuition.
Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA) Accounts
Uniform Transfers to Minors Act (UTMA) accounts and Uniform Gifts to Minors Act (UGMA) accounts allow an adult custodian to manage money or property for a minor child. The custodian handles the funds for the child’s benefit, including education expenses, until the minor reaches the age of majority. Once the child reaches that age, the account is turned over to them, and they can decide how to use or invest the money. These accounts do not require specialized legal documents or a court-appointed trustee, making them a simpler alternative to a formal trust.
Impact on Financial Aid
Keep in mind that setting aside money for a child’s or grandchild’s education may affect their ability to qualify for need-based financial aid. How an account is owned determines how it is reported on the Free Application for Federal Student Aid (FAFSA) and how it counts toward aid. For example, most trusts and investment accounts are reported as assets of the beneficiary, which can influence the amount of aid they receive.
We Are Here to Help
Working together with your financial team, we can craft a plan that accomplishes your family’s education goals and sets your children or grandchildren up for the best possible future. Let us help you choose the right approach for your loved ones; contact us today.
Posted in: Estate Planning, Gifting, Student Loan Debt, Trust