How to Pay for College
(when you really do not want to)

When our two daughters were very young (four and eight) my wife and I realized that one day they would be going to college and would need a lot of money to do so. We began brainstorming as to how we would come up with the funds to put our children through four years of college. One option was to begin saving money in a separate account marked "college savings fund" and skimming off as much cash from our spendable income as life would allow. Since this did not sound like much fun we considered other alternatives but, none of the other savings/investment plans sounded good (primarily because it lowered our life-style capabilities NOW).

We finally decided to let two of our investment properties fund the kid's college education via future appreciation. Each of the two target properties were in their own separate land trusts (this is one of the many benefits to placing each property into it's own separate land trust....as we expouse constantly). We had each property appraised at current market value and then sold an option on each respective property for each kid (actually, for each kid's land trust).

So, when the dust settled we had the Trustees of our kid's land trusts hold options on land trusts that held title to investment real estate. Consequently, the trusts that held the options (for the benefit of the kids....who were each beneficiary of their own trust) on the trusts that owned the real estate captured the appreciation from that day forward until the kids turned college age. Once the girls turn college age and needed money for tuition we had the option of allowing the options to be exercized (and the kids selling of each property for cash) or buying the options back from the kids (at a profit to the kids).

What do you think we did?

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