As you begin to consider your will and estate plan, you know that leaving money to your grandchildren is your main goal. Your adult children are doing fine. You want your grandkids to have a great chance of success. How should you leave them the money?
The easiest way is simply to name them as beneficiaries in your will. When you pass away, they get the money that you left to them as a lump payment.
Of course, there are issues with this. What if the children are too young? What if you don’t want them to get the money until they turn 25, which will hopefully help them make better decisions about how to use it? What if you want to give it to them for a specific purpose, like education?
If so, you can use a trust to do it. The trust can give them annual payments over time, pay a lump sum at a set age or go directly for education or any other purpose. You get to choose how you’d like to set the trust up.
On the subject of education, you may also want to consider putting the money into a special savings account, like a 529. This allows you to gift as much as $15,000 every year, long before you pass away. You can do that for five years. Your grandchildren can eventually use the savings plan for school and it’s all tax-free.
These are just a few of the many options that you have. You must know what steps to take to set up the ideal plan for your family.