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Some older California residents who are preparing their estate plan might consider setting up an educational trust for their grandchildren. While a 529 savings plan can fund an education as well, a trust has a few advantages over it. A trust can help ensure that the youngest family members also have access to education, and it can be set up in such a way that it finances the education of generations that follow them after the grantors have passed on.

However, there are some potential drawbacks to an educational trust that people should consider. One complication may arise if one beneficiary chooses a very expensive education while the other one chooses a less expensive state university. Some may get scholarships while others do not. Experts suggest that people setting up an education trust define “education” broadly. For example, a person might want to attend a camp to pursue a sport or study abroad. An education trust should permit beneficiaries to pursue what they are passionate about.

There are certain measures a person can take to make the trust more effective. For example, there can be a provision that if any money is left in the trust by the time beneficiaries reach a certain age, such as 30, the rest of the assets can be distributed.

Estate planning can be a way for a person to pass assets to beneficiaries, plan for end-of-life care, reduce estate tax, donate to charity and more. One way to approach complex estate planning such as educational trusts is to discuss the plan with family members. When beneficiaries understand the rationale behind certain estate planning decisions, they might be more amenable to those choices. A person also has the option of setting up a trust that is tied to specific conditions including educational achievements.