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.
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.