What You Should Know About Leaving an Inheritance for Your Grandchildren
When you first thought about your estate plan, you probably gave a great deal of thought to leaving your assets to your children. As your children grow up and start their own families, you may start to think about making provisions in your estate plan for your grandchildren. Doing so, in fact, may be especially critical if there are any special circumstances, concerns, or issues within your family.
In my practice as an estate planning attorney, I am often asked about including grandchildren in an estate plan. There are benefits that may be realized, but there are some potential complications as well.
Making Provisions for Minor Grandchildren
Leaving behind a gift or inheritance to a minor child (those under the age of 18) is a fairly complex matter. You cannot simply leave them the assets and hope it all works out. Instead, you must appoint a guardian to manage and oversee the assets until the child becomes of age or until they are able to manage the money on their own.
Smaller gifts are somewhat easier to plan for since you can often appoint a trusted adult or deposit the money directly into a College Education Savings Plan. This is generally the most cost-effective solution for smaller monetary gifts (typically less than $15,000). Just be sure to discuss this option with your attorney before putting it into place, especially if you have concerns or special circumstances (i.e. no viable options for a trusted adult).
Larger gifts and real property gifts typically require a trust—which is essentially tool for the legal management of the assets and/or property. This means more expense, but you can often use the same trust for all of your grandchildren. Further, you can request that the trust continue for the beneficiary’s lifetime, and you can even set up alternative beneficiaries in case the primary beneficiary passes away before they receive their last payment.
Making Provisions for Adult Grandchildren
Adults can receive their inheritance outright, but this may not always be the most favorable option. Those who cannot manage money well, have a great deal of debt, or suffer from special needs or substance abuse may still need a trust to ensure the inheritance is not squandered, taken by creditors, or otherwise lost. In addition, you will need to carefully consider potential tax liabilities of the gift you leave behind. Your estate planning attorney can help you examine your options.
We Are Here to Help You
You do not need to handle the complexities of estate planning alone. Instead, contact the Gierach Law Firm and obtain the assistance and guidance you deserve. We take the time to understand your situation and offer creative solutions to suit your needs. Learn more about how our experienced Naperville estate planning attorneys can assist you. Call 630-756-1160 for a confidential consultation today.