Tips For Grandparents When Estate Planning For Grandchildren
If you have the means to do so, leaving money to your grandchildren is a way to support their future success and take care of financial needs. In particular, many grandparents in your position are looking for options to defray educational costs that continue to rise. Statistics reveal that college expenses have tripled in the last 20 years, reaching upwards of $55,000 per year. However, a key challenge you face is one you share with many others: Concerns about leaving money or other property to grandchildren, some of whom may be minors or young adults that have a lot to learn about financial responsibility.
Fortunately, there are many options available under Florida law when you want to provide for your grandchildren through your estate plan. A Dade City estate planning lawyer can custom-tailor an arrangement that suits your goals, but you might find some tips to be useful.
Review All Relevant Factors
At the outset, it is important to ask a few questions when considering estate planning for your grandchildren as beneficiaries:
- How old are these individuals now? Your concerns about money management would typically only apply to minors and young adults.
- Will you completely skip your children in your estate plan? You may have reasons to disregard your own children if you have other intentions for your legacy.
- Are you engaging in estate planning for purposes of estate taxes? For high net worth estates, there may still be implications through generation-skipping taxes.
Use Caution with Basic Transfers to Grandchildren
A key mistake in estate planning is making direct bequests to young people in your will, without any restrictions on the assets they receive. You should also carefully consider beneficiary designations on bank accounts, life insurance policies, and other assets that have “pay on death” provisions. Essentially, all a beneficiary has to do to gain access to these funds is present a death certificate.
Consider Options That Offer More Control
During your lifetime, you can spend down your estate through gifts to your grandchildren under the Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA). These laws allow you to create a custodial account, but your grandchild still receives the funds upon turning 18 years old.
For more control over your assets when providing for your grandchildren, consider the following estate planning options:
- Living Trusts: You create and manage a living trust during your lifetime. To protect trust assets, you would include restrictions on distributions.
- Testamentary Trusts: You can create this type of trust in your will, and can include similar restrictions on distributions such as how the money is used until that child reaches a certain age,
Contact a Florida Estate Planning Attorney About Your Options
While it is encouraging to know that you have multiple ways to include grandchildren in your estate plan, it is still crucial to have solid legal advice in developing and executing the arrangement. Our team at The Law Office of Laurie R. Chane is ready to serve your needs, so please call 352-567-0055 to set up a consultation at our location in Dade City, FL.