An employer wants to pay for part of the college of a former employee's child (sort of a scholarship, I guess)
Question:The employer is closing his doors but wants to give something to this employee. We figure best route is for the employer to receive the bill from the school and then pay it directly. Are they missing any other implications or requirements? Even more, are there any sample forms/contracts out there the employer can draw up with the former employee to specify the agreement and arrangement?
If the purpose is to assure the child's college education, then the best arrangement all the way around would be for the employer to put money into a college trust that would revert to the employer if the child died or otherwise could not complete college. This should be something the college can set up or advise on. If properly done, then the education is assured if the employer dies, the employer gets the tax break of a charitable donation - which would have to be repaid if returned to the donor. The problem I see with the arrangement you outline is the risks of problems if either the bill or the check gets lost in the mail and the tension of worry about it being late, etc. And the college might not be too happy about waiting for the money.
I can point to two charitable donations that were promised without papers being worked up where the donor died and the heirs were nasty about keeping the money and both organizations, building on expectations of the money, went down the tubes. Formal is better.
What you are suggesting is just a scholarship for the student established by a donor. If the amount of the scholarship is going to cover all tuition and fees then, yes, he probably would want to see a copy of the billing statement. Then he can send the money directly to the school. If he's just going to pay a set amount each term then he can just send the check to the school with the student's name and social security or student ID number (to make sure it gets posted to the correct student (how many Mary Smith's are there?)) and then the school will apply to the tuition and fees.
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