Frequently Asked Questions

Here are some answers to questions we're often asked.
What is a trust?

The key thing is that a college savings ‘trust’ is not ‘you’. In the eyes of the law it is a separate ‘person’, just like a corporation is a ‘person’. Hence the asset protection shield; by law, regardless of what happens in your life, the funds in the trust are fully protected and cannot be seized by any creditors.

What does it cost?

There are no set-up fees, no annual fees, and no trust filing fees for saving cash or investing it in our various portfolios. Click here to see our fee schedule. The only time "regular" trust fees would apply is if you contribute assets other than cash to your college savings trust (e.g. real estate, private business ownership interests, publicly traded stocks or bonds, etc); which are all permissible, but just take a lot more work on our end to manage.

Impact on grants, loans and financial aid?

A College Trust has zero adverse effect on applications. On the other hand, 529 Plans, Coverdell account and UGMA/UTMA accounts can have a serious negative impact on your child’s application for grants, loans and other financial aid.

"Sound complicated? It is. And we are only talking about the federal financial aid rules here -- each school can (and most will) set its own rules when handing out its own need-based scholarships, and many schools are starting to adjust awards when they discover 529 accounts in the family."

Read entire article: Plan for college -

"...any withdrawals (from a 529 Plan) used to pay for their college will be counted as untaxed income on the FAFSA. Let's say a grandmother wants to cover a full year of her grandson's tuition at a private college, which costs $45,000. He'll be a freshman in 2017, and he plans on applying for financial aid every year. On his first and second FAFSA, he'll have nothing to report, but when he applies for federal aid for the 2019-20 school year (when he's required to report prior-prior year income) his untaxed student income that was generated from Grandma's gift may reduce his aid package by as much as $22,500 – Yikes!"

Read entire article: Yes your 529 plan will affect financial aid -

Are there limits on contributions?

There are unlimited contributions as there are no tax penalties on college trust accounts in the event that the savings account is overfunded, or if they don't attend college and instead pursue other paths in life. This account has no limits, other than as prescribed by IRS rules (e.g. the $5,000,000 lifetime exemption). 529 Plans, on the other hand, have severe penalties if the account is "over funded" or if not used for exact, limited IRS-approved college expenses.

Can the funds be used for other types of education?

Not every child winds up going to college. Many people find fulfilling, well-paying careers and lives in various trades or professional services that may require a license or certificate, but not a college degree. These include computer programming, construction, nursing, teaching, social services, and so much more. The college savings trust can assist with all of these while a 529 plan cannot.

Do I have to wait until my baby is born in order to open a trust and start saving?

Opening a college savings trust while pregnant is a fantastic idea…and totally fine! This allows you to get a jump on your college savings and allows family & friends to pitch in here, instead of just another cute outfit or stuffed toy. Yes, you can open the account now and then give your little beneficiary a name in the trust as soon as you’ve done that in real life!

Will this college savings trust in anyway negatively affect grants, scholarships, or student aid?

Not at all. Unlike a 529 Plan, Coverdell, UGMA or other type of unprotected account, there is a nuance in trust law that is very, very important here. Your child is the beneficiary, and all the funds will go to him or her. However, the trust (as a separate entity) is the owner of the funds. This means that the assets in the trust are not counted as assets of your child (or of you) when it comes to grant applications, scholarships, or any sort of financial assistance. In fact, you never even need to disclose the existence of your trust to anyone!

Can we use the money for...

Any college in the United States? Yes!
What about universities in other countries? Yes, no limitations or restrictions.
What about trade or technical schools (e.g. a pharmacy or nursing program, a computer programming school, a real estate license, etc)? Absolutely, no limitations or restrictions!

What about pre-college expenses such as...

Test prep? Yes!
Tutoring? Yes!
Travel expenses for college tours? Yes!
Travel & program expenses for charity work and resume-building activities? Yes!
Moving expenses to/from college? Yes!

And college expenses such as...

Tuition? Absolutely!
Books? Of course!
Lab fees? Yes!
Lectures & special events? Yes!
Computer & other equipment? Yes!
Phone? Yes!
Rent? Yes, including on-campus, off-campus and fraternity/sorority.
Transportation? Yes!
Health insurance? Yes!
Electives (e.g. semester abroad, club memberships, social dues, etc)? Yes!

How much can I put into the account?

Initial Deposit: Unlimited, no restrictions. We recommend that you start your account with a reasonable amount of money in order to get things kicked off. ‘Reasonable’ depends upon your own situation, as on one hand you need to start the program, while on the other hand you have to keep some funds handy for other things in life.

Future Deposits: Unlimited, no restrictions. We suggest committing to a monthly deposit amount that works within your budget. You can always increase this and/or make larger supplemental one-time deposits when good things happen such as a work bonus or raise, a tax refund, a gift or an inheritance.

Can my family and friends also contribute? How easy is it?

Yes, this is one of the key features of your college savings trust – it’s super easy for family and friends to pitch in. We’ll give you a unique link ( that will provide a secure page where they can deposit to the savings trust. This is the best way to ‘give the gift of education’!

What happens if my child doesn't go to college?

Not all kids go to college. As there’s no way to know today what path your child may take 18 years from now, you have to plan for the best. If it turns out that college isn’t in the cards, then the funds in the trust can be used for other things, such as trade schools or business ventures (within reason), or even for basic living or healthcare expenses. There are no penalties.

What happens to any funds left over post-college?

This can easily happen. Funds in trust will be held until the “age of ascension”, generally meaning 30 years old (but can be set anywhere between 18 and 65 by you when you open the account), at which time the trust may be liquidated and funds released directly to the beneficiary. Until then, the funds in trust can be used for grad-school, starting a business, buying a first home, or even for reasonable living expenses. They are shepherded by both mom & dad and the trustee until the young adult matures a bit more.

What if something bad happens, like an accident or illness?

Heaven forbid, if something unplanned happens to your child then you will want and need the flexibility to use the funds in the trust to help. And yes, this is one of the great features of your trust account!

Are the savings REALLY protected?

Yes, really! Lawsuit, bankruptcy, divorce, tax lien, etc…it doesn’t matter as no creditor, not even the IRS, can attach or seize funds in the trust. The caveats here are that the funds cannot be contributed to the trust by means of fraudulent conveyance (e.g. putting the money into trust after you’ve already been sued). Plus, your trust is private and not disclosed by us to anyone.

How do I request a disbursement to pay for something? What's the process?

Easy, just log onto your account and click the link to request a disbursement. This will then send a confirmation email to mom & dad (or whomever the grantor is) with a link they need to click to confirm the request. It is then queued up for trustee review, which is handled pursuant to the trust agreement. Approved requests have funds sent as soon as they are liquid in the account.

How are trust funds invested?

The trust savings is either held in interest-bearing FDIC-insured cash or invested in various income and capital-gains producing vehicles, in accordance with the investment-preferences you set for your trust, and as you may update from time to time. These may include stock market index funds (ETF’s”), real estate, corporate bonds, government-insured securities, and cash.

note: effective March 29th, 2018 we are no longer investing trust assets in the ETF and have liquidated all trust positions in publicly traded securities. This is due to market uncertainty and our belief that the stock and bond markets are starting a potentially long-term downward cycle, combined with our primary focus and desire to protect the savings and assets of our customers. That said, if you want stock or bond market investments then we can certainly do that, just call us to discuss it.

How are investment gains taxed? Who pays the taxes?

Unrealized capital gains are not taxable, of course. So the question is how are realized gains and investment income taxed? Easy. The trust issues a K-1 to the Grantor (e.g. mom & dad), who include that amount on their tax returns. And if that results in mom & dad owing taxes on that amount? Again, easy, as the trust can reimburse you for the amount of those taxes.

I have questions, how do I get ahold of a trust officer?

Reach out to us anytime by email, by online chat or by phone!, (702) 840-4000.

Are post college funds professionally managed until age of ascension?

New graduates are often tempted to make some poor life choices when it comes to use of funds. Excessive travel or partying, purchasing expensive cars or other depreciating, illiquid assets, and poor business investments are all too common for 21-year-old kids with funds sitting in trust. Except with a college savings trust, the parents (grantors) continue to review and confirm or deny every expense request and the Trustee professionally manages the funds the trust as fiduciary. This continues until the age of ascension, usually 30 but may be whatever you set when you opened the account, at which time the trust can be liquidated if desired. Until then, funds cannot be wasted. Used to help buy a new home? Absolutely. Rent and living expenses? Yes, within reason. Cover medical and health issues? Definitely. Travel? Some, within reason. Starting a business or opening a practice? Sure, depending upon the circumstances (e.g. a newly graduated dentist purchasing a practice from a retiring dentist would likely be fine, a newly graduated communications major who wants to open a ski school in Orlando would be suspect).

What do I need to know about taxes?

Unlike an IRA, funds going into a college savings account are via after-tax dollars, not pre-tax (this is true regardless of whether it’s a trust or a 529 Plan). Taxes on investment income and realized capital gains may, or may not, be waived in a 529 Plan. For a 529 Plan to work you need to be 100% sure that your child will wind up going to an accredited college, 100% sure that the tuition and other IRS-approved expenses will be more (not less) than you saved, and 100% sure that you will never, ever need funds for healthcare, phone, travel, tutoring, or any other expenses that are not on the approved short-list. Otherwise you’ll pay not just income taxes but also a 10% penalty on those funds. Even if you do plan perfectly, the inflexibility, lack of asset protection and potential negative impact on grants and financial aid make 529 Plans less than ideal. With a College Savings Trust there are no such restrictions or tax penalties.

What about opening an account while pregnant?

A college trust allows you to open an account the moment you get the wonderful news, enabling you to update the child's name once he or she is born. This lets you get a jump on savings, and can provide more meaningful baby showers and congratulations gifts with contributions to the College Savings Trust instead of yet another cute outfit or stuffed toy. 529 plans do not allow this and require that the baby be born AND have a social security number before an account can be opened.

Can I add some stipulations to my trust?

Yes, of course. You can add some stipulations within 12 days of opening your college savings trust (e.g. if the child doesn't go to college and you want some or all of the funds to roll into another child's trust for their college). And, at a later date we can easily "decant" your trust anytime (meaning we "pour" the assets of one trust into another trust with features you need at the time).

Are savings protected from lawsuits, bankruptcy, divorce, and other life events?

Yes, really. That's one of the key benefits of a trust instead of a 529 or any other type of savings plan...savings in the trusts are protected by law, held for the benefit of the beneficiary and not attachable to judgements or claims. You can read more in our Trust FAQs.

Want to learn more about trusts in general?

Visit Our Trust FAQs

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