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Making an education trust

When prepared properly, an educational trust may help New York grandparents cover the educational expenses of their grandchildren and future generations. However, there are many questions that they may need to ask themselves before creating such a trust. For instance, it may be necessary to consider if a trust is even worthwhile. Those who are contributing more than $28,000 a year may wish to simply write a check to a grandchild's college or university because of gift tax implications.

For those who are contributing less than $28,000 a year, it may be enough to save through a 529 plan. Once it is determined that a trust may be the way to go, it is important to consider whether an individual or pot trust is more appropriate. Furthermore, people should decide whether to offer equal dollar amounts or equal benefits to future generations.

Someone who goes to Ivy League schools for college and postgraduate education will incur far higher tuition expenses than people who go to state universities. In such a scenario, it is important to know ahead of time whether to set up a trust to state that each gets whatever he or she needs to graduate. It is also critical to determine how broadly "educational" can be defined as well as what happens to any assets left over in the trust.

Having the assistance of an attorney may make it easier when it comes to drafting estate planning documents. Legal counsel may ensure that they are created in accordance with state law while also articulating the client's wishes and preserving and protecting the client's property for future generations.

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