How Estate Planning Can Support a Loved One’s Education
One of the most powerful legacies you can leave is the opportunity for a loved one to pursue their education without the burden of overwhelming debt. Through thoughtful estate planning, you can contribute to a child or grandchild’s academic goals in a way that aligns with your values, minimizes tax liability, and maximizes long-term impact.
At Skvarna Law Firm, we regularly help families in Glendora, Upland, and throughout Southern California create estate plans that prioritize education. Whether the goal is to fund private school tuition, college, or a vocational program, estate planning tools like trusts, wills, and tax-advantaged accounts make it possible to support those you love in both life and legacy.
Why Education Deserves a Place in Your Estate Plan
Higher levels of education lead to better job prospects, higher income, longer lifespans, and improved quality of life. But while people universally understand the benefits, the education costs continue to rise. College tuition alone has tripled since the 1960s, and by 2024, the average student debt load had climbed to nearly $40,000. Private K–12 tuition has also increased, with high school tuition in California often exceeding $15,000 per year.
These costs are putting strain on students and families alike. Fortunately, your estate plan can help.
By including educational support in your estate strategy, you can:
- Reduce the need for student loans
- Alleviate financial pressure on family members
- Offer greater access to private schools or higher education
- Help cover costs associated with internships, externships, or trade school programs
- Minimize estate and gift taxes through smart planning
Ways to Fund Education Through Estate Planning
Employ several estate planning strategies to provide for a loved one’s education. Some are implemented during your lifetime, while others are designed to take effect after your death.
1. Direct Tuition Payments
One of the simplest and most effective ways to fund education is by paying tuition directly to an institution. The IRS does not consider direct tuition payments to be taxable gifts, which means:
- You don’t use any of your annual or lifetime gift tax exemption
- Payments can be made for K–12 schools, colleges, or trade schools
- This strategy can reduce the size of your taxable estate
- However, this exemption only applies to tuition—not room, board, books, or other expenses. It’s best used in combination with other strategies for full coverage.
2. 529 College Savings Plans
A 529 plan is a tax-advantaged savings account designed specifically for education. You can open and fund a 529 during your lifetime and name a child or grandchild as the beneficiary. Contributions grow tax-free, and withdrawals for qualified educational expenses—tuition, fees, books, and even room and board—are also tax-free at the federal level.
Additional benefits include:
- Use of funds for private K–12 tuition (up to $10,000 per year)
- Potential state income tax deductions or credits
- The option to front-load up to five years of gift tax exclusions at once
- Beginning in 2024, the ability to roll over unused funds into a Roth IRA (subject to limits)
- Although you cannot create or fund a new 529 plan through your will, your estate can distribute funds to a surviving account owner who continues to manage it for your intended beneficiary.
3. Coverdell Education Savings Accounts (ESAs)
A Coverdell ESA allows you to contribute up to $2,000 per year per beneficiary. While contributions are not tax-deductible, the account grows tax-free, and qualified withdrawals are not taxed. Coverdell funds can be used for a wide range of educational expenses—from kindergarten through college—including tuition, books, tutoring, technology, and more.
Coverdell accounts offer more investment flexibility than 529 plans but have lower contribution limits and phase-out rules based on income.
4. Gifting Through a Trust
A trust can be a highly flexible way to support a loved one’s education while maintaining control over how and when funds are used. A trust can be established and funded during your lifetime (revocable or irrevocable), or it can be created through your will (a testamentary trust) and funded after your death.
You can instruct the trustee to:
- Pay tuition directly to schools
- Distribute set amounts for education annually
- Cover expenses beyond tuition, including living costs, field trips, or internships
- Trusts allow for customized language—ensuring that funds are used exactly as you intend, with clear boundaries and protections for the beneficiary.
Education Isn’t Limited to the Classroom
While tuition is often the biggest expense, other costs also impact a student’s ability to succeed. Your estate plan can help fund:
- Internships and externships: These valuable learning experiences may require students to relocate or take time off from paying jobs. Covering rent, food, or transportation can make the difference between participation and missed opportunity.
- Field trips and enrichment programs: From international study programs to academic competitions, these experiences create lasting impact. Your trust can set aside funds to cover them.
- Vocational or trade school: Not every student takes the college route. Funding career-focused training programs helps launch meaningful, skilled work without the burden of debt.
Lifetime vs. Posthumous Gifts
Both lifetime and after-death gifts can be used to support education. Which is best depends on your financial goals and your loved one’s needs.
During your lifetime, you can:
- Make direct tuition payments tax-free
- Fund and control 529 plans
- Give up to $19,000 per person annually (in 2025) without gift tax
- Pay for related expenses without needing probate or trust administration
After your death, your will or trust can:
- Direct your executor or trustee to pay tuition from estate assets
- Continue distributions for education through a trust
- Name beneficiaries for accounts, including 529 plans or education-focused investments
Careful coordination between your estate and gift tax strategies is essential. These two systems are unified under current tax law, meaning that lifetime gifts reduce your available estate tax exemption. Planning both together creates better outcomes for everyone involved.
About Skvarna Law in Glendora and Upland, California
Skvarna Law helps individuals and families across Southern California with estate planning, wills, trusts, and elder law. With offices in Glendora and Upland, the firm is dedicated to providing strategic, compassionate guidance tailored to each client’s goals. Whether you’re planning for your own future or protecting the people you love, Skvarna Law makes complex legal decisions easier to understand and manage. Visit skvarnalaw.com to schedule a consultation.
