Estate Planning Considerations for Grandparents
Grandparents who share a special bond with their grandchildren understandably want to make certain that their estate plan includes their grandchildren. It may seem like making gifts directly to grandchildren is a good way to accomplish that goal, but that approach has significant risks. Fortunately, a knowledgeable attorney can help you develop a strategy that addresses all the important estate planning considerations for grandparents to take into account to continue the family legacy.
Making Gifts to Grandchildren
Before you make a direct gift to a grandchild in your last will and testament or through other means (like a beneficiary designation) to continue your family legacy, you should consider all the potential ramifications in both the short and longer term. Failing to take the possibilities into account could result in your grandchild not fully benefiting from your gift.
The grandchild’s age can be a significant factor. Since a minor cannot own property, a gift to a young child would be controlled by someone else on their behalf. When the grandchild becomes 18 years old, or if they are already over the age of 18 years, they receive full control of outright gifts from a grandparent.
The financial responsibility (or lack thereof) of a beneficiary is a concern that a grandparent should take into account when considering direct gifts. An adult grandchild who receives a direct gift from grandparents can spend all the money however they wish, as quickly as they want. If a grandchild has problems handling money or incurs a lot of debt, or has other problems like drug or alcohol dependency, a direct gift is a very bad idea.
Even if an adult grandchild has proven to be responsible in handling money, giving an inheritance directly to the grandchild can expose that money to claims by a divorcing spouse, creditors of the grandchild or their spouse, or even fraud or exploitation by a gold digger or someone else with bad intentions. An inheritance also can be lost through unanticipated legal liability arising from a lawsuit or other legal claim.
Grandparents who want to include grandchildren in their estate plan for their family legacy without creating all these risks have an excellent alternative to making direct gifts. An experienced estate planning attorney can help you create and fund a trust that benefits your grandchildren without exposing the legacy to any of the drawbacks inherent in a gift.
Protecting Your Grandchild’s Inheritance
Including a trust in your estate plan is the best way to protect your grandchildren’s inheritance. When you create a trust, you determine how and when the trustee distributes the trust assets to the beneficiaries. You also specify the purposes for which the funds may be used. The trustee can be authorized to take changing circumstances over time into account, as well. By controlling distribution of your grandchild’s inheritance with a trust, you avoid the risks posed by making direct gifts.
A trust can have multiple beneficiaries, so it can provide for more than one grandchild. Depending on your family circumstances, you may even wish to provide for future grandchildren who are unborn at the time you create the trust. You determine whether your grandchildren benefit in equal amounts or whether the trustee can distribute assets according to the individual needs of the beneficiaries.
Asset Protection for a Family Legacy
To provide for a family legacy well into the future, a trust can include both your children and grandchildren as beneficiaries, and even future generations of your family. The same risks that arise when you make direct gifts to grandchildren also exist if your adult children inherit your estate outright in a will or through beneficiary designations. A trust provides the same legacy protection for the inheritance of an adult child as it does for grandchildren.
Controlling distribution of your family legacy by including a trust in your estate plan can protect assets for your children, grandchildren, and even future generations of your family. A trust also enables you to provide for the needs of individual family members as they change over time, even after you are no longer here to care for them.
In a trust, you may choose to fund basic needs and concerns like education, or you can provide for life-enriching experiences like travel. Your instructions to the trustee in your trust document can provide the trustee with the flexibility to address your family’s circumstances in the future. Direct gifts to family members in a will or otherwise simply do not provide the same benefits as a trust.
If you use a trust to protect your family legacy, you can still make individual gifts of personal property to your grandchildren through your will. Leaving a tangible memento that is special to you will always remind your grandchild of you. Grandparents often include a handwritten note with the item to explain the meaning and the reason the grandchild received the gift.
Talk With a Georgia Estate Planning Attorney to Preserve Your Family Legacy
In our Cartersville estate planning practice at Asset Protection & Elder Law of Georgia, we focus on protecting our clients, their assets, and their family legacy, whatever their unique circumstances are. We also provide advice about all other aspects of estate planning that relate to a client’s individual circumstances.
We provide services to clients throughout the communities northwest of Atlanta, including in Bartow County, Cobb County, Cherokee County, Gordon County, Floyd County and Paulding County.