Estate Planning Considerations for Grandchildren
Is there anything better than being a grandparent? Having grandchildren comes with all the fun and benefit of being part of the growth and development of this child’s life and experiencing the joy of youth all over again but in a unique and different way. Therefore, it’s not uncommon that a grandparent includes their grandchildren as their direct or secondary heirs in their estate plan.
How to Plan for an Inheritance for Your Grandchildren
There are several estate planning tools and options that you have if you would like to leave an inheritance to your grandchildren. Here are a few examples:
• Establish a standalone or testamentary trust
Similar to estate planning for individuals who have children, when a grandparent is setting up an estate plan for their grandchildren, they often worry that that child may be too young to receive any type of inheritance flat out. Therefore, what you may want to consider is establishing a standalone trust or a testamentary trust for the benefit of that grandchild or grandchildren. There are benefits and drawbacks of both options which is why you should always speak to an estate planning attorney in more detail regarding your choices depending on your situation. One of the great things about a trust is the fact that you can designate that your grandchild receives certain sums of their inheritance at certain ages, or you can opt that they receive a lump sum when they reach a specific age.
• Designate them as a beneficiary of a retirement account
One of the things that grandparents like to do is leave behind an inheritance to their grandchildren in the form of a retirement account. This is an account that can be transferred into the name of the grandchild and held until they reach a certain age. Keep in mind that pulling any money out before a certain time will result in a tax consequence so it’s important that you take this into consideration if your grandchild is in a position where he or she may need access to this money more urgently.
• Stock transfer
A stock is a wonderful inheritance to leave behind for your grandchildren. There is always a shift in the stock market and if you were one of the lucky individuals to get in on the ground floor of a stock that is currently booming, transferring that stock to your grandchild upon your death is a great way to leave a legacy behind. If you have more than one share of stock, you can always split your stock evenly among your grandchildren.
Have a Family Discussion
Before you start planning for your grandchildren, it’s important that you first take the time to speak to your children about the planning that you are considering. Your children may have great recommendations or questions regarding the plan that you may not have considered. If possible, you may want your children to come to your consultation with you so any of their concerns regarding their children receiving an inheritance can be addressed.
Schedule Your Consultation Today
Our office has an abundance of experience working with families from all different types of backgrounds. Whether you need to amend your estate plan, or this is the first time that you’re considering putting one together, you can rest assured that you will receive the attention and the care from our team of estate planning experts during this important time in your life. If you would like to learn more about the options that you have for leaving behind a legacy for your grandchildren, we encourage you to get in touch with us today and set up a consultation.