You've considered all of your children and planned for them in your estate plan, but now your children have children of their own. As such, you might want to plan for your grandkids too. How you plan for your grandkids in your estate will depend on whether they're currently minors or adults, and other factors.
Let's take a look at some considerations for an estate plan as it relates to your grandkids:
- Will your grandchildren be subject to the generation skipping transfer (GST) tax? This is a tax that the government levies on certain gift taxes and estate taxes.
- Do you want to leave assets specifically earmarked to fund your grandchildren's educations? You can set up their inheritances so it can only be spent on education.
- Also regarding education, consider taking advantage of the Uniform Gifts to Minors Act (UGMA) and the Uniform Transfers to Minors Act (UTMA) while you're alive, as this could serve to lower the total taxable value of your estate while assisting your grandkids with their educations.
- Do you have a 529 plan? You can change the successor designation to be a grandchild, who will take over the management of the account when you die.
- If you have any financial accounts or insurance policies, and you want any of those accounts to go to your grandkids, be sure update the beneficiaries associated with these accounts to include the names of your grandkids.
There are a lot of things you can do to plan your estate with your grandchildren in mind. All it takes is a little bit of legal knowledge, foresight and an understanding of the estate planning options available to you and your family.