A parent or grandparent in North Carolina who wishes to fund the education of heirs through an estate plan will need to consider issues like equal treatment and differences in educational costs. Paying for the schooling of multiple heirs could be accomplished by setting up a single pot trust for all of the beneficiaries or separate trusts for each heir.
Pot trusts get their name because they pool the educational funds into a single pot. Unless the terms carefully specify that all beneficiaries are to receive equal funding, beneficiaries might receive substantially different distributions. This could arise when one person goes to a costly private school and another person attends a less expensive public school. Age differences in heirs might favor older beneficiaries as well. The eldest beneficiaries might deplete the funds before younger heirs have a chance to go to school.
When a benefactor places a priority on the equal distribution of funds among heirs, separate educational trusts might represent the best choice. The person could place equal amounts of assets into each trust. This approach, however, might not provide sufficient funding for someone attending an expensive school and leave unused money in a trust for someone who went to an affordable school.
A person creating an estate plan will need to make decisions about how to approach educational funding for heirs. The insights of an attorney could introduce the person to ideas about how to structure trusts and promote specific goals. An attorney might help someone sort through options. After the person makes decisions, an attorney may strive to write a trust document that thoroughly addresses and promotes the goals of the benefactor. The person might also receive advice about how to select a trustee or contingent beneficiaries.