One of the most meaningful ways to use your estate plan is to help a loved one achieve their educational goals. Interesting ways estate planning can fund your loved one’s education include paying for private school, college, vocational training, or internships. A well-structured plan can open doors that might otherwise remain closed due to rising education costs.
The Rising Cost of Education
Education is often associated with higher income, better health, and a longer lifespan.1 However, affording that education has become increasingly difficult.2 Tuition and fees at colleges have risen by 60 percent between 2000 and 2022, now averaging nearly $15,000 per year. Private K–12 schools also cost around $12,000–$13,000 annually.3 Over a lifetime, the total cost of private education from kindergarten through college can exceed $300,000.4
This rising cost has led many students to take on significant debt—federal student loan balances in 2024 averaged nearly $40,000, while private loans pushed the total higher.5 Trade and vocational schools offer more affordable options, typically costing between $5,000 and $20,000, and have seen enrollment growth.6 But even non-tuition costs like housing, transportation, and supplies can be a burden. This is where interesting ways estate planning can fund your loved one’s education come into play.
Smart Estate Planning Options to Fund Education
To reduce the financial strain on future students, your estate plan can include a range of gifting strategies:
Direct Tuition Payments – Paying tuition directly to a school is not considered a taxable gift under federal law. This applies to private schools, colleges, and trade schools, but only covers tuition—not room, board, or supplies. It allows you to support education without tapping into your annual or lifetime gift tax exclusions.
529 Plans – These state-sponsored education savings accounts offer tax-free growth and tax-free withdrawals when used for qualified expenses like tuition, room and board, books, and computers. Contributions may also be eligible for state tax deductions or credits. You can even front-load five years’ worth of contributions—up to $95,000 starting in 2025—to maximize savings.
Coverdell Education Savings Accounts (ESAs) – Though contributions are capped at $2,000 per year, ESAs allow tax-free growth and can be used for a wide range of K–12 and higher education expenses, including tutoring, fees, books, and certain technologies. Interesting ways estate planning can fund your loved one’s education through ESAs include covering non-traditional expenses.
Trusts – A revocable living trust or testamentary trust can provide long-term education support. You can instruct the trustee to pay specific educational costs or allow distributions for items like internships, study abroad, or field trips that may not qualify for tax-free savings plans. Trusts can also preserve flexibility and control, especially for young or financially inexperienced beneficiaries.
Timing Your Educational Gift
You can make educational gifts during your lifetime or through your estate plan:
During Life:
- Make direct tuition payments to reduce your taxable estate.
- Fund 529 plans or ESAs to grow assets tax-free.
- Use the annual gift tax exclusion ($19,000 per person in 2025) to make general-purpose gifts.
After Death:
- Your will or trust can direct funds to pay for tuition, create education-focused trusts, or distribute assets for beneficiaries to open their own education accounts.
- Name a successor owner for existing 529 plans.
Each approach has different tax and legal implications. Interesting ways estate planning can fund your loved one’s education should be considered with the guidance of our estate planning attorney in Greenwood Village, who can help you determine the best combination for your family.
Education as a Legacy
Educational gifts go far beyond covering tuition. They represent a long-term investment in your loved one’s potential and well-being. With the right structure in place, you can ensure your support is used wisely and in alignment with your legacy goals.
If you’re ready to create or update your estate plan with an education component, contact our Colorado estate planning law firm. We’ll help you design a strategy that empowers future generations while offering valuable planning benefits.
- Anna Zajacova & Elizabeth M. Lawrence, The relationship between education and health: reducing disparities through a contextual approach, Annual Rev. of Pub. Health vol. 39 (Jan. 12, 2018), ↩︎
- Adam Looney, How Much Does College Cost, and How Does It Relate to Student Borrowing? Tuition Growth and Borrowing Over the Past 30 Years, Higher Educ. Today (Sept. 9, 2024), ↩︎
- Jessica Bryant, Cost of College Over Time, Best Colls. (Feb. 25, 2025), https://www.bestcolleges.com/research/college-costs-over-time. ↩︎
- Melanie Hanson, Average Cost of Private School, Educ. Data Initiative (Aug. 29, 2024), https://educationdata.org/average-cost-of-private-school. ↩︎
- Melanie Hanson, Student Loan Debt Statistics, Educ. Data Initiative (Mar. 16, 2025), https://educationdata.org/student-loan-debt-statistics. ↩︎
- Lyss Welding, How Much Does Trade School Cost?, Best Colls., (May 23, 2024), https://www.bestcolleges.com/research/how-much-does-trade-school-cost. ↩︎
