As the cost of a university education continues to increase, many parents and grandparents wonder how to safeguard funds for their children or grandchildren’s education.

Like most estate planning decisions, saving for higher education is not a one size fits all approach. Depending on your situation, there are a few different ways to put money aside for college or university goals.

Educational trust

In South Carolina, you can set up an educational trust for the express purpose of paying tuition fees and related educational expenses for the trust’s beneficiary.

As the grantor of the fund, you appoint a trustee to manage the funds. That way, your trustee controls the money in the fund until your child or grandchild comes of age to pursue higher education.

Revocable living trust

In some cases, you may want to set aside money that your grandchild could use for education while keeping her or his options open. A revocable living trust contains many of the same benefits of an educational trust, but also grants the beneficiary more flexibility.

While education is an important investment, other life paths can disrupt the road to higher education. A revocable living trust allows the beneficiary to use those funds for medical bills, a down payment on a house or starting a business.

The same trustee arrangement applies, so that any minor beneficiaries would not have access to the funds until they are better able to make mature decisions.

529 plan

In other cases, a 529 plan may match your and your family’s needs. However, make sure that you understand the tax implications of a 529 plan. While the 529 plan will save you some money upfront through income tax, a trust can have a more positive impact later on by avoiding estate taxes and probate proceedings.

Another advantage to establishing a trust is the flexibility of assets in the trust. Alternative assets like life insurance or property can also remain in the trust until distributed upon your passing.