Estate Planning Around Grandchildren
Many individuals preparing an estate plan do not only consider their children in the plan but grandchildren, as well. In fact, the grandchildren are often more of a focus than the adult children for many estate plans.
The following tips should be kept in mind when considering grandchildren in an individual’s estate plan.
Leaving Money to the Grandchildren
The most common way to ensure that grandchildren are provided for in an estate plan is by leaving money to the grandchildren through a will or a trust.
If the testator wishes to leave money to both his or her adult children and grandchildren, this can be done through separate designations in the will or trust document.
Sometimes many individuals choose to skip over the adult children and leave their estate to their grandchildren.
The problem in this scenario is it can sometimes present a picture of distrust in the adult children. If the grandchildren are minors it should be noted that this money will be in the care of the nominated trustee and if no trustee is named the funds may have to go into a conservatorship for the minor.
Unless the adult children are financially secure and are not in need of an inheritance, it may be a wise decision to leave money to both the adult children and the grandchildren in the document.
Considering Age
One consideration that should be taken into account is the age of the grandchildren receiving the inheritance. For many 18-year-olds, receiving a large sum of money can be complicated and hard to handle.
During that grandchild’s life, while the testator is still alive, he or she can test the waters by perhaps “gifting” that grandchild a sum of money to see how he or she can handle money in a larger amount.
If the grandchild needs some guidance, a trust may be a better option to provide additional protection for the grandchild until they reach financial maturity.
Creation of a Trust
Many individuals choose to prepare a trust for different reasons. Some of these include avoidance of estate tax or probate. The reasoning for creating a trust can also be ensuring that money is protected for the beneficiaries.
Unlike in a simple will, where the beneficiaries receive the money outright, a trust can list stricter requirements.
If the grandparent wants the child to be older, such as 25 or 30 years of age, that can be written into the trust. If the grandparent wants the grandchild to receive a certain sum of money to go towards college, that can also be designated.
A trust can also be kept open for a longer period of time, providing that grandchild a specified amount of money through his or her life until that grandchild reaches a certain age.
The options are endless with a trust and we advise that everyone should discuss the specific situation for each grandchild with a trust attorney and financial advisor to see what would work best for their family.
Specific Bequests
For many grandparents, it is not the matter of leaving money to a grandchild that is important but leaving something that is treasured and special between the grandparent and grandchild.
If the grandparent wishes to leave a sentimental object to the child, this can be done through a specific bequest in a will, as well as a revocable trust.
Many grandparents desire to even gift the item to the grandchild during his or her lifetime, and this is a perfectly acceptable way to handle making sure that certain important items of property go to the person the grandparent wishes to receive them.
Predeceased Grandchild
Unfortunately, sometimes a grandchild predeceases a grandparent. In these tragic circumstances, it helps to have a plan in place as to who will then receive that deceased grandchild’s share.
Unborn Grandchildren
It is also quite possible that the grandparent will have other grandchildren be born following the creation of the estate document. The will or the trust should take into account this possibility.
Sometimes grandparents direct that their estate be divided up equally amongst their “then living” grandchildren rather than naming specific grandchildren. This option could ensure that later-born grandchildren are considered in the estate plan, as well.
Step-Grandchildren
If the grandparent also has step-grandchildren who are not related to him or her by blood, unless they have been legally adopted into the family, they will not be included in an estate distribution unless otherwise listed.
Therefore, if the grandparent wants to make sure that these step-grandchildren are accounted for, they do need to be listed specifically in the estate document in whatever manner the grandparent wishes.
Contact Brian M. Douglas, LLC today
If you are not sure you need an attorney, you can always come in for a consultation to discuss your situation.
Call us today at 770-933-9009 or contact us online to schedule your free consultation with a Greater Atlanta area probate lawyer today.
