Education Trust
Fund education with conditions and accountability
Why People Use It
Parents and grandparents use education trusts to fund schooling with guardrails. Funds only release for educational expenses—tuition, books, living costs during school—not for other purposes.
Who This Is For
- Parents saving for children's education
- Grandparents wanting to fund grandchildren's schooling
- Family members wanting to give with purpose
- Anyone concerned about education funds being misspent
- Those wanting more control than a 529 plan provides
Key Benefits
Purpose-Restricted Funds
Money can only be used for education—not cars, vacations, or other expenses.
Flexible Definition
You define what 'education' means: college, trade school, graduate programs, or even entrepreneurship training.
Verified Disbursements
Trustee confirms enrollment before releasing funds, ensuring money goes to actual education.
Alternative Paths
Build in options for what happens if the beneficiary doesn't pursue traditional education.
Real World Scenario
Grandma's Education Fund
The Situation
Grandma wanted to fund her three grandchildren's college education. But she'd seen her niece blow through a $50,000 inheritance in six months and worried about the same happening to her grandchildren.
The Outcome
Her education trust specifies funds can only be used for tuition, books, and room/board during active enrollment. The trustee pays schools directly when possible. If a grandchild pursues trade school instead of college, funds still apply. If they don't pursue any education by 30, remaining funds convert to general inheritance with a spendthrift provision.
Core Conditions
- Funds restricted to educational purposes
- Verification of enrollment required
- Direct payment to institutions preferred
- Age or milestone-based access levels
You decide the conditions, verification methods, and level of control.
How It Works
Define Educational Scope
Specify what qualifies—college, trade school, graduate programs, etc.
Set Funding Rules
Determine how much can be used, for what expenses, and verification requirements.
Fund the Trust
Contribute funds that will be used for educational expenses.
Disburse with Oversight
Trustee verifies educational enrollment and releases funds accordingly.
Why a Trust?
| Alternative | Limitation | Trust Advantage |
|---|---|---|
| 529 Plan | Tax advantages but limited to specific expenses; penalties for non-education use | More flexibility in defining education; no penalties for alternative paths |
| Direct Gifts | No control over how money is spent | Purpose restrictions and verification requirements |
| UTMA/UGMA Account | Beneficiary gets full control at age 18-21 | You control when and how funds are released, regardless of age |
Common Questions
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Not legal advice. Subject to KYC/AML. Availability varies by jurisdiction.