There are a number of different ways that grandparents can provide for their grandchildren when they are devising an estate plan. Exactly how to go about it will depend on a number of factors.
One of the things that would matter would be the age of the grandchild in question. If you are planning ahead for the well-being of a minor grandchild you could convey gifts in trust into a trust fund.
If the overall value of your estate is in excess of the unified gift/estate tax exclusion amount (which is going down to just $1 million in 2013) you may want to give gifts that stay within the $13,000 annual per person gift tax exemption.
This exemption exists above and beyond the lifetime unified exclusion. If you take advantage of this exemption you are reducing the value of your estate for tax purposes while you transfer assets for the benefit of your grandchild in a tax-free manner.
One can also convey assets into a custodial account for the benefit of a minor under the Uniform Gifts to Minors Act.
Of course you can create a trust for an older grandchild as well. And if you have grandchildren of school-age you could pay for their school tuition as a gift free of the gift tax.
It is also possible to pay for health insurance premiums as a gift without incurring any taxation.
These are a few things to think about as a grandparent who is interested in providing for his or her grandchildren. If you would like to delve into greater detail don’t hesitate to pick up the phone to arrange for a consultation with a good Cleveland estate planning lawyer.
- Beneficiary Designations and Other Non-Probate Transfers - February 24, 2020
- Estate Planning Conference DiscussesSECURE Act and More - February 17, 2020
- The SECURE Act and What It Means for You - February 10, 2020