Estate Planning for Your Beneficiary’s Education

It’s common for those engaging in estate planning to want to leave provisions for the education of their descendants. Higher levels of education have been show to lead to significantly higher wages and decreased risk of unemployment. Those benefits, in turn, usually lead to better outcomes including higher job satisfaction, improved self-esteem, improved access to healthcare, and increased civic engagement. Ensuring that loved ones will have a reasonable opportunity to receive higher education, whether it be university, postgraduate, or even just private secondary school, sets them up for a better quality of life.

However, earning a college degree has never been more expensive, as university tuition has tripled since the 1960s. In 2025, the average cost of tuition at a public university costs over $58,000 when accounting for tuition, fees, housing, and other expenses. This has, therefore, led to an increase in student loan debt. In 2025, experts estimate that the average public university student will borrow nearly $32,000 to obtain a bachelors degree. Postgraduate degrees further balloon this number. The average postgraduate degree is believed to cause students to incur over $100,000 in federal student debt as of 2023.

In order to avoid incurring this massive amount of debt, most students will tend to lean on family members for assistance. This contribution can not only allow your loved ones to attain a quality education, but also avoid incurring hefty amounts of debt to do so. Thus, estate planning can be a crucial tool to provide for your family even after death, and there are many instruments to do so.

Gifts

Normally, gifts are thought of as a tool to be used during your lifetime, but gifts given can have serious implications on estate tax rules. For instance, gifts given during your life apply to the gift tax rules, while gifts provided for in your estate planning will apply to estate tax rules. However, these two sets of rules work in unison, meaning that you will need to consider how gifts given during your life will affect your estate.

For instance, currently you are able to give a gift or gifts up to $19,000 to an individual in a single year without incurring a gift tax. Any gift exceeding that amount not only must have taxes paid on it, but it begins to eat into the lifetime gift exemption. This means that it begins to count towards the limit (currently $13.99 million as of 2025) that can be passed to an individual as gifts and in distributions through the estate before taxes must be paid.

Simply put, this means that giving any large sums in gifts towards an education, including direct payments of tuition, will begin to eat into that limit in an individual’s estate tax exemption. On the flip side, however, if you keep those gifts below the annual limit of the gift tax, you will preserve your descendant’s tax-free inheritance. 

Wills and Trusts

Perhaps the most common tool for providing for a loved one’s education is to create either a testamentary trust or revocable living trust. The difference is that the testamentary trust will only be created by your will at the time of your death from the assets within your estate, while a revocable living trust will be created and funded during your life. For a revocable living trust, you will simply have to provide a trustee to take control of the management of the trust after your death (in a testamentary trust, the trustee will be designated by you in your will or other estate documents). 

Whatever instrument you choose, you can instruct the trustee to pay for a beneficiary’s education, or even to use the funds for specific purposes such as tuition, books, or housing. In either case, these tools will ensure that your estate is protected for its proper use to protect and provide for your loved one’s quality education.

Ready to discuss strategies to better provide for your family’s future? Contact us today to book your consultation with one of California’s leading estate planning attorneys.