4 Ways Grandparents Can Help Grandkids Avoid Financial Struggles
Many parents and grandparents in New York want to make sure their kids and grandkids are financially stable after they are gone. Here are a few steps grandparents can take to make sure that their grandchildren are not struggling financially in the future.
Give a financial gift
One way to help your grandchildren financially is to gift them money while you are still alive. In 2023, you may gift up to $17,000 to each grandchild and a total of up to $12.92 million for your lifetime, without having to pay the federal gift tax.
Establish a trust
A trust is another way to keep money aside for your grandchildren and allowing them to bypass probate. You may set up individual trusts for each grandchild or a family trust, if there are many kids in the family. You can specify how the funds will be distributed (e.g., installments), how old the child must be before they receive their money and other conditions that must be met before the child can receive those funds. The person who serves as your trustee will be responsible for carrying out your wishes.
Create a 529 plan
You may create a 529 plan in your grandchild’s name with the purpose of funding their education. The money in this account will not be taxed as long as the earnings are used for school-related expenses (e.g., tuition or room and board). However, keep in mind that money put into a 529 plan can negatively impact your grandchild’s ability to get financial aid when the time comes.
Make sure to take care of yourself
As we get older, creating an estate plan becomes even more important. In addition to creating a will and/or trust to make sure your grandchildren and other loved ones are cared for, you should make sure that you are caring for yourself as well. Creating a long-term health care plan and naming agents to have medical and financial power of attorneys to make decisions on your behalf if you become incapacitated are also important. Having a solid plan in place can take financial and emotional pressure off of your children and grandchildren.
There are many ways for grandparents to protect and care for their grandchildren long after they are gone. An estate planning attorney can help you come up with a plan that serves the best interests of those you care about most.