<p>I’m not even sure “administer” is the right word, which demonstrates my level of expertise in this area. Before his death, my father-in-law established a trust to help with each our kids’ college expenses. My husband and I were designated as the trustees. We invested the money under guidance from a money manager. It dropped by 65% shortly thereafter, during the big plunge, and has rebounded to about 60% of original value. We have filed tax returns every year but haven’t done anything else. Now, with D headed to college this fall, it’s time to start drawing on her account. We will deplete her trust within less than two years. I’m wondering about the correct way to proceed. We can have the brokerage cut us checks as needed. As long as we keep receipts and records of each expense, can we just deposit the checks into our own account to cover Visa expenses and personal checks we write for tuition and other valid costs? Or do we need to set up separate checking/credit card accounts for these expenses? And who do we show our records to, anyway? I read something about showing an accounting to the grantor or the parents, but the grantor is deceased and we are the parents.</p>
<p>You could conceivably be sued by the beneficiary of the trust–for mismanagement or for unauthorized expenditures. So best to keep records.</p>
<p>What vehicle is the $ invested in? If you will be using the money within the next two years, it should be in something like a money market account in the brokerage. I know that my money market account has checks issued with it–I can write checks on the account so long as the checks are over $300. You should check with your brokerage.</p>
<p>If so, you could just write the big checks on the money market account for the bill the university will be sending you twice a year. The bill will detail the charges for tuition, room, board, health fee, student fee and every other fee that you can think of.</p>
<p>I’d photocopy the check and staple it to a copy of the bill from the college for your records.</p>
<p>Frankly, I don’t like the idea of commingling the funds. Have the trust pay the education expenses directly.</p>
<p>I’ve been administering my Dad’s Trust for the past twelve years. The Probate Court here requires an accounting every three years. YMMV. But I’d still recommend treating the Trust as if the Banking Commission was looking over your shoulder. No co-mingling of funds, no preferential spending, no borrowing, no checks to self, etc. Keep a separate checkbook, and tie each expenditure to a bill or invoice. JMHO.</p>
<p>PS, And since you’re going to exhaust your D’s portion of the Trust long before she graduates, I’d suggest using Trust monies for Tuition and Room & Board only. Again, JMHO.</p>
<p>Having been involved with deceased parents’ trusts for several years now, I’ve learned much more than I want to know. There are all kinds of state specific laws. If your children’s trusts are simple trusts with only them as the beneficiary and you as the trustee, then you may well be able to do whatever you want. If there are other beneficiaries besides your children, that’s where things become more interesting and - based on my experience - I’d strongly suggest you consult with a trust attorney before going any further.</p>
<p>I administered my kids’ UTMA trusts for their college educations–the easiest thing to do is to have the bank/broker/etc. write a check for the big-money purchases like tuition directly to the college/university.</p>
<p>Thank you all for your insight and advice. I’ll follow up on your various suggestions and I will definitely be careful about record-keeping and receipts. Appreciate the help!</p>
<p>If you have a chance to qualify for any aid in subsequent years, you might want to spend the funds down all in the first year- if it is less than the COA, rather than spread it over two years.</p>