When you have grandchildren, you most likely think about what you will be able to leave them when you have gone. It is a good thing to think about estate planning in advance and work out how you want your grandchildren to benefit from whatever you have decided to leave them.
Taking the time to think about estate planning for your grandkids in advance is a great way to ensure that your grandchildren will not have to pay a great deal of taxes on any gifts you leave them.
Getting Started with Estate Planning
To start, there are many different websites that can give you assistance with this. You might even want to consider speaking with a financial advisor in order to see what you can do and what laws are associated with your decisions. Always take the time to speak with someone if you are not sure where to begin.
The Basics of Estate Planning
In the US, you can give your grandchildren a gift of money of up to $13,000 each year (as of June 2011). Therefore, if you know that you are going to have a great deal of money to leave for your grandkids then you may want to start leaving them some now. When you give them a little bit each year, they will not have to pay taxes on it and they will be able to put it away for college or for a future home or other expenses.
How Will Your Money Be Used
If you are concerned about where this money may go, or how your grandchildren may use it, then you can make a direct payment for their school or health costs.
You can give the same amount of money to these institutions and you will know that the money is going to be used in the manner you wish. This is just one way to make sure that your money is going to be put to good use.
Just make sure that you are making the payments to the institutions directly in your grandchild’s name so that there is no need to lose sleep over where the money went.
Trust Funds and Estate Planning
Another great way to secure your estate planning is to take the time to set up a trust fund for your grandchildren. When you do this you are able to set limits on when the money can be taken out of the account and what the money can be spent on.
The bottom line is that you need to be very comfortable with the amount of money that you are going to be leaving for your grandchildren. It is also very important to make sure that you are checking on the investments that you are considering so that you are sure they are going to make money for your grandchildren. Keep in mind that interest may be taxed for gifts of money.
Since this can be so confusing, it is best to work with a professional and learn all that you can before you begin making any plans. This will put your mind at ease and make estate planning much less complicated for you.