How do I set up a trust for my daughter?

June 19, 2005 6:15 AM

My father wants to pay for my daughter's preschool education. Is there a way to put it into a trust where it can be used solely for the schooling but also cannot be removed by my father?

So my father has offered to pay for 2 years of my (only) daughter's preschool education. My husband and I could afford it if we needed to, but this will help us save money and give my daughter a good environment to learn. My husband is wary because there has been a slightly rocky relationship between he and my father. He doesn't want to be in the position of having the promise made, making some life changes, and then have the money taken away.

At the same time, I'm not sure if my father will simply hand over the cash, as he wants to make sure it's being used only for the education. So, is there a way he can put the money into a trust where it can be used for the schooling, but also can't be taken back?

posted by jeremias to Work & Money (9 answers total)

Can your father pay the school directly?
posted by sexymofo at 6:22 AM on June 19, 2005

So, is there a way he can put the money into a trust where it can be used for the schooling, but also can't be taken back?

Yes. It will require an attorney and a Third-party administrator. It will probably cost over $1,000, all told, so bypassing the trust and prepaying the school is probably a better option.
posted by Kwantsar at 7:25 AM on June 19, 2005

Prepaying the school was my first thought, too.
posted by rolypolyman at 8:05 AM on June 19, 2005

Don't pre-pay the school . . . talk about being stuck. :> Things happen, and if you were considering pulling your child from the school, for whatever reason, the money would be a ridiculously complicating part of the equation. (For the same reason, the school might also refuse such an agreement--kids get expelled, even from private pre-schools--all the time.)
posted by littlegreenlights at 9:23 AM on June 19, 2005

My thought was that your father could pay the school directly month-by-month (or whatever terms you can work out with the school). Being a single-parent, I often pay for tuition directly (pre-school, dance lessons, etc.). (In my case, it's more a convenience thing rather than a trust thing but the end results seem to be the same.)
posted by sexymofo at 9:45 AM on June 19, 2005

That doesn't ensure that Father will continue to pay every month, which is the heart of the question.

Have him put it in escrow. Or even a simple joint account requiring both his signature and yours in order to withdraw the funds. Go have a chat with your bank/CU, and see what they suggest.
posted by Alylex at 10:16 AM on June 19, 2005

I have a different take.

It is your father's money. Since you say you yourself could afford the school if necessary, do take him up on his offer, and if he should renege, simply pay yourself.

Actually, from experience I can tell you parents do attempt to control via pursestrings, and it might be much better to avoid the entanglement in the first place.
posted by konolia at 3:04 PM on June 19, 2005

Like konolia said, don't make the life changes until you have enough saved away to pay for the rest of the preschool.
posted by grouse at 4:08 PM on June 19, 2005

Ask Dad to put it in a simple trust. It's likely that this scenario will come up again, so a trust could be used again. If the control issues are really bad, don't accept the gift.
posted by theora55 at 8:08 PM on June 19, 2005