Leaving a trust to grandchildren: Can it wait until they’re adults?
If you’ve decided to leave a trust to your grandchildren, you have a number of options when it comes to passing on your legacy. If they’re still minors when you pass away, you’ll need to make sure there is a trustee involved that can carry out your wishes. If you want your grandchildren to have access to your assets only once they’ve reached adulthood, you can do that, too.
Schedule a free consultation with our attorneys from the comfort of your home to discuss your unique situation. There are many ways to craft an estate plan that works for you and your family.
Leave instructions to distribute your inheritance over time
One of the options you have available to you is to distribute your inheritance over time. You can stipulate that your grandchildren receive a certain amount immediately after your passing, and then the rest when they are adults, in their 40s, in their 50s, or whenever you feel is right!
For minor grandchildren, consider setting up a lifetime trust, or a trust that will last until they are in their 40s. Consider who you will appoint as the trustee to oversee the money, since your grandchildren will be completely reliant on them to steer them in the right direction. You can’t know whether your grandchildren will be financially wise when they’re young, and a trust will protect their inheritance until they’ve grown up and can manage it themselves.
Even if your grandchildren are young adults, a trust can provide periodic disbursements that allow them to start a new business, buy a house, supplement monthly income, and more. Periodic payments can prevent money from being misspent.
If your grandchildren are grown, periodic payments can also help protect a trust against potential divorces, wasteful spending or even creditors.
Create a revocable trust for your grandchildren
A long-term revocable trust provides continued management of assets regardless of their age when you pass away. In the trust, you’ll list a trustee to manage the money until the child becomes an adult (or whatever age you choose). A trustee can be the grandchild’s parents, another family member, or a close friend. In the trust, you can stipulate specific things or activities that the money should be used for, as well as when it can be accessed in your estate plan. Be very clear with your intentions so that there is no room for error.
Another way to use trusts is to create the trust during your lifetime, name yourself as the trustee, and transfer some of your property into the trust for the benefit of your grandchildren. That can give you the confidence that the trust is set up the way you want it to be. You can also feel confident that once you pass away, your grandchildren and even your great-grandchildren will continue to benefit from the property in the trust.
Avoid having only a will when passing assets to your grandchildren
Parents and grandparents alike often think that if they name a guardian for their minor children or grandchildren in their will and something happens to them, that named person will be able to use the inheritance to take care of the family. But that isn’t the case.
A will is subject to probate court. The court, then, not the guardian, controls the inheritance until the children reach legal age. Grandchildren frequently inherit money, real estate, stocks, CDs, or other investments from grandparents. But if the child is still a minor when you die, the court will usually get involved, especially if your grandchildren are still minors. A minor can’t be on a title or conduct business in their own names.
It’s best to create a trust to avoid getting the courts involved.
It’s critical to examine your estate planning goals with an attorney to make sure that your plan reflects your wishes. You want to be sure your assets get to the right people at the right time. You also want to be sure that you’re making the right decisions for tax purposes, keeping more money in the hands of your family and out of the hands of the government or courts.
Schedule a free consultation with our attorneys from the comfort of your home today.