Benefits to Setting Up Grandchildren's Trusts
You love your kids, but let's face it -- they have already done the greatest thing they will do for you, which is give you grandkids. Now you're over the next generation but very excited about the one following, your youngest family members with all their potential.
You hope to live long enough to see them fulfill it and you want to ensure that you will be able to help even after you are gone. Do it with a grandchildren's trust, which is great for your grandkids and for you, too. Grandchildren's trusts are advantageous to grandparents as they have certain tax benefits. So let's consider these grandchildren's trusts and how to set one up.
Why a Trust?
A trust fund is a way to hold money for another under certain conditions and with supervision. A trustee is appointed to manage the trust and ensure that the wishes of the grantor -- in this case, the grandparents -- are fulfilled. One of the major advantages of creating a trust for someone is that you, as the grantor, can manage how money is spent, when it is received, and what it can be used for.
If you are concerned about your grandkids' education, creating a trust is one way to put aside money for that specific purpose. Keep in mind, however that when it comes to money for college specifically, there may be other savings options that are superior, so do ask your lawyer what works best given your particular needs.
A grandchildren's trust in particular has tax advantages for you, the grandparent. When you transfer money into a grandchildren's trust, the funds are subject to the generation-skipping transfer tax, and this means that you can lower your own estate taxes.
In order to ensure that you understand the consequences of any action you take for you and your grandchildren, it is a very wise idea to meet with a lawyer. Don't just take advice from friends about what they did with their money and set up trusts without guidance. Make an appointment to talk to counsel who can explain what will work for you and your grandchildren based on the facts that matter in your particular situation.
Consult With Counsel
If you are concerned about passing along money to your grandchildren, or just generally concerned about estate planning, don't delay to talk to a lawyer. Many attorneys consult for free or a minimal fee and will be happy to discuss your situation and provide guidance.