Why Not Leave it To Your Grandkids?
In a recent meeting, a client (who I will call "Judy") was discussing how she wanted to leave assets to her family. She has two children and six grandchildren. In her current estate plan, Judy has left her assets to her children at her death and has had discussions with them about possibly distributing some of their inheritance to their children.
As we discussed her plan further, I reminded Judy that since it is her plan, she can distribute her assets any way she wants.
Judy's living trust can provide for protection of assets being left to grandchildren and it can also specify how the assets are to be managed and distributed to them for their benefit. Her trust can allow a grandchild the opportunity to participate in the management of his or her inherited assets at an age that Judy determines is proper for a grandchild to gain control. This new plan would also guarantee that her grandchildren will inherit from her in case she has any concern about the assets not being distributed the way she desires.
Once Judy recognized the possibilities, she felt compelled to include her grandchildren directly in her estate plan. She began discussing the personalities and activities of her grandchildren and the joy each one of them has brought to her. She had different ideas and thoughts for each one since they were all unique in personalities, interests, and ages.
I shared with her that she can name her children as the trustee for the trusts created for their children (Judy’s grandchildren) and be the ones responsible for managing each grandchild’s trust under Judy’s instructions. Judy's plan also benefits her children more since they would have assets set aside for their children to spend and protect for them – a plan that would protect both the children and grandchildren from claims of creditors and others that could take away their inheritance.
Judy then instructed to divide her estate among her children and grandchildren in the way she wanted with special instructions for her trustees (her children). Her trust now spells out her detailed wishes concerning the management and spending of her grandchildren's trust money.
Judy was pleased to know this new plan will allow for her assets to be used just how she wanted, even after she is gone. Her children will have her money to spend for her grandchildren just as she would have spent for them for their hobbies, activities, education, and weddings.
If Judy couldn't have a physical role at any of these special events and milestones in the future, she at least took great comfort in knowing she would still have a very special part in each of them.