Estate Planning for Your Grandchildren
Grandparents, since the beginning of mankind, have played a very important role in teaching, loving, and influencing the grandchild’s values and behaviors. Grandparents are often the second most important relationship in a child’s life, only next to their parents. Further, thanks to increases in life expectancy, more children are able to enjoy time with their grandparents. Lastly, grandparents are increasingly becoming a more important part of their children’s and grandchildren’s economic well being as younger generations struggle to get a financial foothold.
Common Estate Planning Solutions for Grandparent to Help Their Grandchildren:
Overwhelmingly, grandparents desire to maintain the health, wellness, and education of their grandchildren and children even after their passing. Like all estate plans, the solutions are unique to each family dynamic. Below are a few common scenarios:
Scenario 1: Grandparents are Primary Care Takers of the Children:
For grandparents that are actively raising their grandchildren due to the children’s parents being deceased, incarcerated, or otherwise unfit to fulfill the primary parental role, grandparents will typically want to protect their grandchildren through an estate plan similar to how they would for their own children.
This would include the core estate planning documents including a revocable living trust to allow a trustee to provide for the continued health, wellness, and education for the grandchildren after the grandparent’s pass. They may also want to appoint a guardian to take parental responsibility upon a period of incapacity or death.
Scenario 2: Grandparents Have Done Well Financially, are a Big Part of Their Grandchild’s Life, and the Parents are Struggling Financially but Otherwise Able to Take Good Care of the Children:
In this scenario, a grandparent may want to pass the majority of their estate to their adult children through Beneficiary Designations, Will, and or Revocable Living Trust. However, they may want to also ensure that their grandchildren attend and graduate from college. In this example, a grandparent could start a 529 educational savings plan for each grandchild that could be passed down to them at their passing. Another option would be creating separate trusts for each grandchild which indicates how the trustee should distribute the funds.
Scenario 3: Grandparents Have Done Well Financially, are a Big Part of Their Grandchild’s Life, and Fortunately Their Children are Doing Well Financially:
In this scenario, the grandparents may not need to, but still desires to provide for their grandchildren and pass on part of his or her legacy directly to the grandchild. In this situation, there are many options including a trust, creation of a 529 plan, or a simple specific cash bequest to each grandchild that could be held by the custodian until a certain age is reached.
While there is no “one size fits all” plan and by understanding your individual circumstances and family dynamics a good estate planning attorney will seek to listen, understand, and tailor an estate plan that best suits your individualized needs.
A bit about us – Matt Devitt Law is a full service estate planning law firm located in Livonia, MI. In addition to estate planning we also provide legal counsel for small businesses and off a full suite of real estate legal services as well.
We work with our surrounding communities including Livonia, Northville, Plymouth, Novi, Farmington Hills, and beyond. Our focus is on providing pragmatic value based solutions for your estate planning, small business, and real-estate legal needs. Give Matt a call (734) 335-0713 for a free consult. We are also proud to offer full estate planning services virtually when requested.