The Ties that Bind: Grandparents and Grandchildren
Compliments of Our Law Firm,
The memories made with grandchildren are some of the best. Still, it’s understandable to want to leave them with a bit more than great stories to someday pass down to their own grandchildren. Fortunately, there are many ways to accomplish this. The key is to ensure there’s no ambiguity in your will and other estate planning documents. Even better, there are ways to gift assets today so you can witness the many benefits your gifts bring, whether it’s ensuring they get a great start in their adult lives or easing financial concerns as they plan for college.
You can gift every grandchild up to $14,000 annually in 2015 and if you’re married, you and your spouse can double the gift with no tax repercussions, regardless of how many grandchildren you have. Not only do you not have to worry about the taxes, but your grandchildren won’t have to count the gifts as taxable income. However, if you are contemplating applying for Medicaid, gifting could be problematic. So be sure to speak with an estate planning attorney.
If you’re concerned about gifting cash, instead you can opt to cover medical expenses and/or educational costs. This is achieved easily by making payments directly to the healthcare provider or school, for example, because there are no limits on these types of payments, you still have the option of gifting cash too, provided it doesn’t exceed the annual limit.
You might also consider establishing a trust for the benefit of your grandchild. With this option, you can transfer money into the trust at any time. Other options include contributing to a 529 Account, which earmarks funds for educational purposes.
Nothing’s more important than time spent with family, but for many grandparents, they also want to be sure their grandchildren have a great start with the financial advantages they may not have had. Otherwise, with the many options available today, it’s never been easier to help them put that foundation in place. Be sure to consult with a qualified estate planning attorney so that you know your efforts achieve the good you intended.