As you age, it is common to think about the financial well-being of your family, including your youngest family members. This might include not just children, but also grandchildren and great-grandchildren. Assets passed on to these family members can then be used to pay for things like college funds or purchasing a first home.
Deciding whether to pass assets on to grandchildren requires weighing several options. Each family is unique, and when it comes to creating an estate plan to benefit your loved ones, you should consider how to tackle your grandchildren’s needs without creating any subsequent legal challenges or tax burdens.
Trusts Can Prove Particularly Helpful
If you have one or more grandchildren who are minors, you might decide to pass assets to a trust. You also might then decide to appoint a person or financial entity to manage the trust for you. Trusts can help permit a person to address their wishes.
Assets Need Not be Distributed Equally
If you have multiple grandchildren, you can choose between passing on assets in an equal or unequal manner. Some people decide to pass on the same amount of assets to each grandchild to avoid feelings of jealousy or hurt among loved ones. Some grandchildren, however, have greater needs than others. For example, one grandchild might have special needs or be involved in another type of situation that requires greater financial assistance.
Consider Tax Implications
Various ways exist to pass on financial assets to your loved ones. You might consider thinking about how you want your grandchildren to use these assets as well as what taxes will be placed on these assets. Often, life insurance policies will pass on assets that are not subject to taxation. You also might decide to utilize a retirement account to pass on assets.
Do Not Forget About Your Own Needs
You might be tempted to help your grandchild pay for important things like a first vehicle or college costs, but this can lead to difficulties. Even if you will be able to afford these gifts based on your existing budget, this situation can quickly change. For example, you might end up living longer than you expect or needing more medical care than you anticipate. Before making plans for your assets, you should engage in long-term budgeting that considers your financial well-being.
Give Second Thought to Beneficiary Forms
A will is a type of estate planning tool that executors use to carry out wishes after the creator has passed away. The financial entity holding your assets, however, has a duty to leave the assets to the person you designate as a beneficiary. To avoid any problems, you might consider completing beneficiary forms addressing how finances you own are handled.
Contact a Knowledgeable Estate Planning Attorney
Deciding how to create an estate plan that achieves your goals can be challenging, but an experienced lawyer can help you with this process. Contact attorney Jim A Lyon today to schedule a free case evaluation.