One of the better ways to do that is through a trust. Trusts, in general, are excellent ways to pass assets to beneficiaries, and they can also help your grandchildren achieve their goals later in life.
If you are considering leaving property or some of your assets to your grandchildren, but you do not want to gift them outright, discuss your options for setting up a trust with attorney, Andrew M. Lamkin, today.
Why Plainview Residents Use a Trust for GrandchildrenÂ
Putting money, property, and assets into a trust for your grandchildren allows you to:
- Create Rules for Their Inheritance: You are in control of their inheritance. That means you can put guidelines on how they can use their inheritance and even when they will receive it.
- Use Milestones for Releases: You can set up milestones over your grandchild’s lifespan so that they do not receive all of their inheritance at once.
- Protect Property from Dangers: You have no way to tell what your grandchildren’s life will be like as they get older. But by adding protections through a trust, you can ensure that their inheritance is not harmed from things like debt collectors, divorce, or even substance abuse issues.
- Help Them Meet Their Goals: You can help your grandchildren go to school, get a master’s degree, or even buy their first home. If you have a grandchild that plans to open his or her own business someday, the property you leave them may help them reach that goal.
What about Estate Taxes?
Trusts may be subjected to Generation Skipping Tax (GST) when established for grandchildren. Under the 2018 Tax Cuts and Jobs Act, however, the GST exemption was added as a second layer exemption. Right now, the GST exemption is the same as the regular estate tax. Therefore, as of 2018, you can leave up to $11.2 million in property to each grandchild without them paying an estate tax. After $11.2 million, they would have to pay.
Establishing a Trust for Your Grandchildren – Where Do You Start?
Trusts are relatively quick and straightforward to set up. But if you have multiple grandchildren or you plan to leave inheritances to your grown children, too, the process becomes more complicated. Also, you want to ensure you set up your trust correctly, especially if your grandchildren are still considered legal minors.
In most cases, you will establish an irrevocable trust. This means, once the trust is established, you cannot change it or reclaim property within it.
Select a Trustee with Care
Be cautious about whom you pick as a trustee. Your trustee approves any distributions from the trust and manages trust funds. You can choose a family member for this position, or you have the option of a neutral third-party. If you are worried that family emotions may affect how the trust is managed, a third party with no ties to your trust could be the better option for ensuring your wishes are met and assets are distributed in accordance to your instructions.
Choose the Right Type of Trust
Once you decide that you want to establish a trust for your grandchildren, the next step is to choose between the two primary types:
- Family Pot Trust: A family pot trust is ideal if you have a large family and a trustworthy trustee that you can ensure will distribute assets properly. With this option, you have one trust and the trustee decides how much or when to distribute property to grandchildren and other beneficiaries. Pot trusts allow you to leave a financial legacy that will provide for future generations, too.
- Individual Trust for Each Grandchild: If you do not like the idea of a pot trust, or you worry that your grandchildren may not receive the distributions you intended, then an individual trust in their name for the handful of grandchildren may be better. You can put equal amounts of money or property into each grandchild’s trust as well.
Be Specific and Leave Stipulations
Trusts are meant to ensure your loved ones are provided for and that they received assets when you want them to receive them. You can work alongside your trust attorney to make sure the language is specific and suits your needs. Stipulations will influence not only when and how much grandchildren receive of their trust funds, but also how they can use the funds.
Often, grandparents will set up key life milestones, such as distributions at 20, 25, 30, and 35. You can also leave instructions to a trustee regarding early distributions for purchasing a house or paying for college tuition.
Discuss the Trust with Family First
If you plan to leave funds to grandchildren, have a family meeting and make sure everyone understands where they stand and how you plan to distribute your wealth. If your grandchildren are minors, explain how the trust works to their parents. Also, make sure the trustee is present at your family meeting to answer questions and make sure everyone is on the same page.
Find a Trust Attorney in Your Area Today
If you are ready to leave a financial legacy to your grandchildren, speak with the Law Office of Andrew M. Lamkin, P.C., to establish your individual or generation-skipping trust for your family today.
We will go over your options, discuss what is beneficial considering your grandchildren’s ages and needs, then get the process started so that you can transfer property into the trust and officially fund it.
We work hard to ensure all trust documents follow state laws, and we help our clients provide for their loved ones years after they have passed.
Your legacy is important to you, and you want to see it live on through your grandchildren. Let our law firm help make that possible.
Schedule a free consultation with our firm today regarding a trust for your grandchildren. We offer free consultations at 516-605-0625, or you can request more information online.
Andrew Lamkin is principal in the law firm of Andrew M. Lamkin, P.C., where he focuses his practice in the areas of elder law, estate planning and special needs planning, including Wills and Trusts, Medicaid planning, estate administration and residential real estate transactions. He is admitted to practice law in New York and New Jersey.
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