Thinking about estate planning requires that you engage in emotional reflection and consider who is important to you. Additionally, you need to think strategically about how you can maximize the benefit that you can provide your loved ones at the end of your lifetime.
It is common for people who are planning their estate to have a desire to include their grandchildren in their estate plan. This is a great way to ensure that they will be able to use your assets to improve their lives in key ways in the future, from paying college fees to buying their first home. However, it is particularly important to ensure that your grandchildren do not use their inheritance for the wrong reasons. This is why provisions can be put in place to ensure that inheritances are used responsibly.
How can I include my grandchildren in my estate plan?
While wills tend to be the most common way of including grandchildren in an estate plan, trusts can be useful in ensuring that funds are spent appropriately. Including your grandchildren in your will means that they will inherit the sum of money in its entirety after the probate process has been completed. However, if you create a trust for your grandchild, you will be able to have more flexibility when it comes to setting the terms.
How can trusts be beneficial regarding the inheritance of grandchildren?
Your grandchildren may be reasonably young when you reach the end of your life, and they may not be mature enough to handle a high amount of assets. Due to this, you may want to put provisions in place to control the funds. For example, you may want to create a trust that gives your grandchild a certain amount each year after they turn 25. This is possible to do with the assistance of specific types of trusts.
Tax implications
If your estate is worth more than $5 million, it will be subject to federal estate tax. In this situation, you may want to consider gifting your grandchildren money while you are alive to reduce the value of your estate.
If you are starting to plan your estate and you want to include your grandchildren, you should take the time to fully understand the law in California.
