Grandparents who have the financial means to leave sufficient amounts of money to their children may also want to set aside an inheritance for their grandchildren. However, if you’re planning to leave money for your grandkids, you might have some concerns about their age and maturity levels.
Here are a few things you can do to responsibly leave money behind for your grandchildren:
- Consider giving money to your grandchildren in small parts before you die: You could do this by actually gifting money to your grandkids in amounts of less than the current annual tax-free gift amount limitation.
- Create a custodial bank account: You may want to give money to your grandkids by setting up a custodial bank account, which you will control until the moment of your death. This will make it easier for your grandchildren to receive their inheritances without the need for their funds to go through probate.
- Create a trust that slowly disperses the money: You could create a special trust that slowly disperses the money to your grandchildren over time. Or, it might provide the full amount to your grandchildren at the age of 25 or 30.
Grandparents who plan to leave inheritances to their grandchildren may also want to consider educating their grandkids about wise financial planning and budgeting. By teaching your grandchildren about fiscal responsibility while they’re still alive, they will be more capable of taking responsible care of the money they eventually inherit.
A host of other estate planning solutions exist that can assist grandparents in leaving behind money for their grandkids. A Newport Beach estate planning lawyer can help you examine your options in this regard.