An educational trust fund a trust established with the sole purpose of providing funding for education. The fund is established by a person or people depositing a sum of money into a trust, where it is managed by a third party called a trustee for the specified educational purpose. It can take the form of a fund benefiting a single individual, or it can be a charitable holding benefiting a group of people such as scholarship recipients, or an educational institution.
The person or group establishing the educational trust fund is commonly called the grantor, donor or settlor. They provide the money or other assets, and stipulate the purpose money will be used for and any other conditions that must be met in order to use the money. The individual, group, or school that will be receiving money from the trust fund is called the beneficiary. The grantor appoints a person or people for the job of trustee, who oversees the trust fund.
The trustee of the educational trust fund has several important responsibilities. It is his or her job to manage the trust fund, considering the best interests of the beneficiary while still ensuring that the wishes of the grantor are fulfilled. Some of the trustee's duties can include investing the money for the best possible return, managing other assets, making payments to the beneficiary, and making sure that all requirements set by the grantor for the fund's use are fulfilled.
When established for single individual, an educational trust fund is usually formed with parents, grandparents, other relatives, or friends as the grantor. The beneficiary is usually a minor child. The trust fund is managed on the child's behalf by the trustee, and money can not be withdrawn from the trust fund until the child reaches a specified age, most often 18 years old. Once the beneficiary is of age, the money may be used to pay for college, graduate school, trade school, or other educational programs. Expenses paid by the trust depend on the grantors stipulations, but typically can include tuition, books, fees, and even living expenses.
When formed for charitable purposes, an educational trust fund most often benefits a group of people or an educational institution such as a college. Frequently these trusts are managed by groups of trustees and may be funded by many donors or a single grantor. Some purposes for this type of trust include giving scholarships to students who meet specific criteria set by the grantor, or providing educational materials such as books and computers to disadvantaged students. Another example would be building or improving school facilities in order to provide a better educational experience for students.