【Education Reserve Trust: An “Education Safe Box” for Everyday Families】

Mr. and Mrs. Yang, both IT engineers, have a son. They own a self-occupied residence valued at RMB 5 million and hold financial assets worth RMB 2 million. With their busy work schedules, the couple worries that loose control over daily spending may compromise their ability to fund their child’s education. They wish to set aside enough in advance to cover schooling costs from primary school through university (estimated at RMB 1.2 million), and to ensure these funds are not diverted toward buying property, investments, or other purposes.

To that end, Mr. and Mrs. Yang place RMB 1.5 million into a trust, keeping their home and RMB 500,000 in liquid assets. The trust agreement stipulates that RMB 80,000 will be automatically transferred each September to a designated education account to cover tuition, educational materials, and extracurricular programs.

Disbursement amounts vary by education level:

• RMB 60,000 per year during primary school

• RMB 100,000 per year during junior and senior high school

• RMB 200,000 per year during university

If the child ranks in the top 10 of their class for the year, an additional RMB 10,000 reward may be claimed as an incentive.

Upon graduation from university, the remaining trust funds—estimated at around RMB 300,000—will be distributed in a lump sum as seed capital to support the child’s entrepreneurial endeavors.

Should both parents encounter an accident or pass away, the trust will continue to operate as originally planned, with the child’s grandparents acting as supervising guardians.

Using a Family Trust to Rigorously Secure Education Funding

Asset Segregation:
Education funds are kept separate from daily household finances, preventing them from being misused for consumption or investment purposes—ensuring the funds are used solely as intended.

Stage-Based Precision Allocation:
Payouts are tailored to different educational stages, aligning funding with actual needs and avoiding both over-reserving and underfunding.

Risk Buffer Mechanism:
Even in the event of family misfortunes, the trust structure ensures uninterrupted education funding, providing the child with stable support throughout their academic journey.