Making a will and setting aside money for your grandchildren's education may be something you've worked hard for. When you get to the point where you are ready to designate that money and set it aside, you have several options for leaving it. Remember, though, that educational opportunities may not always present themselves in the form of college.
Leave your grandchild the money without setting up a trust. This is the easiest way to leave someone money for education. Simply designate a certain amount of money be left to the child. State how you want the money used, but if you do not want to tie the money up in a trust, there is no way to guarantee a cash payment will go to this purpose. If this doesn't bother you, then leaving the money is a viable option. If the child is under the age of 21, you may leave the money to a custodian under the Uniform Transfers to Minors Act which is the same in most states. In this case, the money is left to a designated custodian under the act. Once the beneficiary is 21, he receives the rest of the money.
Be specific when setting up a fund and in your will. Do not say "I want to leave my money to my grandchildren for their education." Write down specifically which grandchildren get which amount.
Set up a trust fund for the child, designating its use for education. In this case, a trustee is designated and that person pays educational expenses and related living expenses out of the trust fund. Being a trustee is different than being a custodian because the trustee files annual income tax returns for the trust, and the powers of a trustee are limited to what's allowed in the will.
State your expectations for the trust in your will, but allow for alternatives. Because you can tie your money in a trust to specific purposes, make clear to the trustee that you consider alternative education such as trips, foreign language study, technical education or apprenticeships to be acceptable. You may have one or two grandchildren who do not wish to pursue a university education, but still want to learn. Perhaps you have a grandchild who wants to study cooking in Italy or another who wants to be a rancher in Montana. Determine if you are willing to fund these types of pursuits as well.
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Writer Bio
Michelle Hogan is a writer and the author of 13 books including the 2005 bestselling memoir, "Without a Net: Middle Class and Homeless (With Kids) in America." Hogan studied English at American University and has been writing professionally since 1998. Her work has appeared in "The New York Times," "Redbook," "Family Circle" and many other publications.