Do you adore your grandchildren and want to leave them a gift upon your passing?
A thoughtful estate planning approach can help assure that your grandchildren receive the gifts you intend while protecting their assets now and in the future. Here are some tips for leaving property to your grandchildren.
1. Make age appropriate plans
Are your grandchildren toddlers, teens, or full-grown adults? Their age matters greatly. If leaving assets to minors, you should put those funds into a trust to protect the assets from misappropriation or misuse. The trust can preserve the funds for when the children reach a certain age or accomplishment. For example, you might open the trust when your grandchildren reach the age of 25 or graduate college. However, be aware that the latter could result in unintended consequences, such as forgoing an inheritance due to an unanticipated illness or a career-enhancing internship that puts college on hold.
2. Consider distributing the funds in stages
A trust can parcel out the funds in various stages, usually by age. For example, the trust can instruct the trustee to distribute the gift in three parts, such as ages 21, 25, and 30. This serves two purposes. First, a lump sum can be a lot for a young adult to handle responsibly. Second, the trust protects your grandchildren’s assets from creditors.
3. Give a gift during your lifetime
You might also consider giving some of the gift while you are still alive. On a personal level, you have the opportunity to enjoy their appreciation for the funds. The gift also might have tax advantages for you and your grandchildren. If the gift exceeds the annual gift tax exclusion amount (currently $15,000), please discuss it with us.
4. Leave treasured items to individual grandchildren
Does your granddaughter love fishing with you? Does your grandson appreciate your fondness for Chaucer? Gifts that directly reflect your shared interests and special bond can become treasured heirlooms. However, be aware that you could inadvertently disinherit a grandchild if you were to sell the canoe or the rare book collection you named for the individual. You can protect against this by creating alternate provisions in case the asset is no longer in existence. In addition, you should revise your will periodically to account for changes in your estate and the lives of your heirs.
5. Account for upkeep and maintenance
Your grandkids would love the beach house or that priceless work of art. However, a house comes with a long list of costs, including insurance, taxes, general upkeep, and renovations. Protecting artwork might also include expenses that fall beyond their means. You can help cover these expenses by accompanying the gift with a trust specifically created to pay these associated costs.
6. Retain experienced counsel to help
Estate planning law is complex. An experienced estate planning attorney in New York can give you the peace of mind that your loved ones receive the assets you intend. Lissner & Lissner, LLP can advise you on forming an effect estate plan that meets legal requirements. Contact us online or call us at (212) 307-1499 today.