.jpeg)
The short answer is yes. You can design your estate plan so that your money goes exactly where you want it to go with no interference from other heirs. It is a bit unusual to leave money directly to young grandchildren, but that doesn’t mean it can’t be done. Typically, while the grandchildren are young, people will leave their assets to their children with instructions for how they want their grandchildren taken care of. If someone dies without a will in Texas, intestate succession laws will provide for children first and grandchildren only in the event that their parents have died.
However, there are several good reasons why a grandparent might want to leave money directly to a grandchild, and they can certainly do that with the help of an estate planning attorney. We will go over a few options here.
Why You Might Want to Include Your Grandchildren in Your Estate Plan
Every family is unique, which is why a custom estate plan is essential for addressing your family’s specific wants and needs. You might choose to leave money to your adult children and to your grandchildren separately, or you might have reason to cut your child or children out altogether. Some typical reasons for skipping a generation include:
You raised your grandchildren
If you served as the guardian for your grandchildren and want them to inherit as if they were your own children, you will have to make sure your estate plan accounts for this. Without a will, your assets would still go to your children over your grandchildren. If your grandchildren’s parents are out of the picture, you will need at least a simple will that cuts them out of inheriting.
Your children have their own wealth
Your children might have no need for additional assets from your estate, but your grandchildren might be making their own way in the world. If you want to help them out directly, you can do it through your estate plan.
You disagree with how your child parents their children
Your child might have cut your grandchildren out, refused to pay for college expenses, or declined to help them with debt or investments. You might want to help your grandchild with these challenges directly.
There is a messy divorce in the family
If your child is divorced and you are worried about the ex-spouse having access to your money, you could leave money directly to the grandchildren, held in trust if they are minors.
Depending on the age of the children, you have a few options available to your for accomplishing your goals.
Options for Leaving Money to Grandchildren in Texas
Our experienced estate planning attorneys will meet with you to discuss your specific situation, goals, and the best option for leaving money directly to your grandchildren. We can guide you through the legal requirements and tax implications and help ensure your estate plan aligns with your objectives while minimizing potential drawbacks. Options we will discuss include the following.
Direct Inheritance
The simplest option is to leave a direct inheritance to grandchildren through a will or other testamentary documents. This allows for flexibility in determining the amount or percentage each grandchild receives. However, direct inheritance may expose the assets to potential risks, such as creditors or divorce settlements. Additionally, young adult grandchildren may receive substantial assets before they reach an appropriate age to manage them responsibly. If your grandchildren are minors, they will not be able to directly inherit any money.
Trusts
Establishing a trust allows you to designate specific assets or funds for the benefit of grandchildren. You can set conditions and limitations on the distribution of assets, ensuring they are used for specific purposes or at certain ages. This is the best option in most situations; however, there are a few disadvantages to trusts. Setting up and managing a trust can involve legal and administrative costs. Depending on the type of trust, there may be ongoing fees and requirements for filing tax returns. Trusts may also restrict the grandchildren's immediate access to the funds.
Gift Trusts
This special kind of trust allows you to transfer assets to grandchildren while retaining some control over the funds. You can specify the terms under which the funds are to be distributed, such as at specific ages or for particular purposes like education or home purchase. On the downside, gift trusts require careful planning and legal documentation. There may be limitations on how the funds can be used, and the trustee may have discretionary powers that can affect distributions. Gift trusts may also have tax implications.
Education Trusts
Education trusts specifically earmark funds for grandchildren's education expenses. This can ensure that the funds are used for educational purposes, such as tuition, books, or other related expenses. The main disadvantage is that education trusts have limited purposes and may not address other financial needs or goals of grandchildren. If the funds are not fully utilized for education, there may be restrictions or penalties on their use.
Uniform Transfers to Minors Act (UTMA) Account
UTMA accounts provide a straightforward way to transfer assets to grandchildren. These accounts are managed by a custodian until the child reaches the age of majority (typically 18 or 21), after which the assets are transferred to the grandchild. One disadvantage to a UTMA is that once the grandchild gains control of the assets, they have the freedom to use them as they wish without any restrictions or oversight. This lack of control can be a disadvantage if the grandchild is not financially responsible.
Do You Need To Speak With An Experienced Estate Planning Lawyer In The Dallas Area?
If you need to speak to an experienced estate planning attorney please contact us online or call our Dallas office directly at 214.559.7202. We help clients throughout the Dallas area with all of their estate planning needs and look forward to helping you.
