Grandparents who want to provide for their grandchildren have a number of options when they are engaged in the process of estate planning. Exactly how to proceed depends largely upon the extent of your assets and the ages of your grandchildren.
If you are in possession of assets that exceed the estate tax exclusion amount you must take steps to gain estate tax efficiency. One way of achieving dual objectives would be to give educational gifts to your grandchildren.
By doing this you would be in a sense giving them partial advance inheritances in the form of educational opportunities. At the same time you would be gaining estate tax efficiency.
Why would the gift of tuition provide any type of estate tax efficiency? When you pay the tuition of a student as a gift it is not subject to the gift tax. As a result, when you write out these tuition checks you are reducing the value of your estate while divesting yourself of assets for the benefit of a loved one in a tax-free manner.
When it comes to providing resources directly to your grandchildren who are minors you could take advantage of the Uniform Gifts to Minors Act to place resources into custodial accounts for their benefit.
You can also create trusts for the benefit of your grandchildren, and this can be done for grandchildren of any age.
Grandchildren hold a special place in the hearts of their grandparents, and it can certainly be a good feeling to know that you have taken steps to provide educational pathways and/or financial resources to these beloved family members.
Author, President and Founding Attorney
Parman & Easterday
Latest posts by Larry Parman, Attorney at Law (see all)
- Clarity is Key to Planning & How Tom Petty Could’ve Done It Better - July 18, 2019
- Why Crowdfunding May Cost You Medicaid Eligibility - July 16, 2019
- Beneficiary Designations, etc., Aren’t a True Substitute for a Trust - July 11, 2019