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Educational Trust Services

In addition to administering pooled and non-pooled special needs trusts for people with disabilities, ACT administers educational special needs trusts.  Educational trusts are trusts which typically arise out of the settlement of disputes between parents and school districts over whether the school district has provided adequate “free appropriate public education” (“FAPE”) for a student with disabilities, as required by the Individuals with Disabilities Education Act (“IDEA”) or whether the school district has properly followed an Individualized Education Plan (“IEP”).

Educational trusts are settled either by the school district or by the parents of the student-beneficiary and funded as provided in the settlement agreement.  ACT’s administration of an educational trust is guided by two documents: the settlement agreement between the parents and the school district and a trust agreement between ACT and either the parents or the school district, depending on who is settling the trust.  The settlement agreement, which comes first, is negotiated by lawyers for the parents and the school district.  The trust agreement is then drafted by the lawyer for either the parents or the school district.  Ideally, the terms of the two documents mirror each other.  Although technically bound only by the trust agreement, ACT refers to both documents when administering educational trusts so as to avoid unnecessary disputes between the parents and the school district.

Educational trusts usually differ from other special needs trusts in a number of ways: disbursements may be limited to very specific purposes, service providers may be required to have specific qualifications in order to be paid from the trust, the trust may have a very short term, and monies remaining in the trust at its termination usually revert to the school district.  Parents must rely on the lawyers negotiating the settlement agreement to be sure that the terms of the settlement do not unduly hamper their freedom to use the educational trust for their child’s best interests.

Once an agreement between the parents and their school district has been reached, ACT will be bound by the outcome of those negotiations as reflected in the Settlement.

In effort to assist school district and their attorney(s) in establishing an educational settlement trust for a student/family, ACT has created the following list of items we require. The information and documents listed will enable ACT to establish the trust as well as administer the trust properly over the life of the trust. If you have questions regarding any of the information below please contact us.

  • Settlement Agreement
  • Trust Agreement (Please be sure the following data is incorporated in the trust agreement)
    • Add date of birth of student in opening paragraph
    • Include School District address and Tax ID in opening paragraph
    • Trust should be named Third Party Education Trust for the Benefit of Student’s Name.
    • Termination of the trust
      • The date of termination should be an actual date even if the trust terminates at a certain age
    • Language that ACT will send quarterly statements to both the School District and parents (ACT will not provide monthly detailed accountings)
    • Language allowing Trustee to pay for legal services if needed to administer the trust
    • Language stating that grantor (School District) is required to sign a release acknowledging they have reviewed the accounting prior to ACT returning remaining funds to grantor
    • Language stating which agreement (settlement or trust) is the governing document.
    • Language regarding Trustee Compensation
      • ACT prefers to deduct fees from the trust rather than invoicing grantor (school district) to pay fees.

We thank you for considering ACT as the Trustee for your educational settlement trusts.

Complete the form below and submit prior or with the Joinder Agreement and Fee Acknowledgement Agreement.

New Trust Information Form 12-20-2018

*This document is offered as a fillable PDF.  If you wish to fill out the form using a computer, you must first save the form to your computer (e.g. Desktop) and then open it in Adobe Reader  (If needed, download Adobe Reader here)  All fields can then be completed on your computer and the document can be saved.

Below are both the Fee Schedule and Agreement. The Agreement must be signed and returned.

Ed Trust Fee Schedule (Rev August 2017)

Fee Agreement June 2018

*This document is offered as a fillable PDF.  If you wish to fill out the form using a computer, you must first save the form to your computer (e.g. Desktop) and then open it in Adobe Reader  (If needed, download Adobe Reader here)  All fields can then be completed on your computer and the document can be saved.

ACT provides the following services:

  • Investment of the educational trust’s funds with experienced investment managers.  ACT consults with the investment managers concerning investment strategies and pays the fees of the investment manager out of ACT’s own trust fees.
  • Preparation and filing of tax returns on behalf of the educational trust when required.  The cost of preparation and filing and any tax due are paid from funds in the educational trust.
  • Periodic reporting to the school district if required by the trust agreement or the settlement agreement.
  • Payment from the educational trust of bills for tutoring and other services, educational materials and other items which are allowed purchases under the trust agreement.  Please see the memorandum entitled “Frequently Asked Questions About Educational Trusts.”
  • ACT’s trust administrators consult with parents and students to help them determine what is permitted under the trust agreement and what is the most efficient and effective way to meet the needs of the student.