While many individuals choose to leave assets to their children in an estate plan, some also look to leave at least some wealth to the younger generation. Grandparents may have many reasons for leaving assets to their grandchildren. They may want to help out people who are younger in their families get a good start, or they may simply want to show their love to these additional family members.
Here are some things to consider for those looking to leave assets to grandchildren:
- The grandchild’s age: Grandchildren over 18 years old are of age to directly receive their inheritance, and can be named directly on an insurance policy or will. For younger grandchildren, it may be necessary to leave the money in a trust.
- Requirements under a trust: A trust may also be necessary for grandchildren of age of majority if grandparents want to put stipulations around how assets can be used. For example, if a grandchild has a substance abuse problem, it could limit their access to funds until this is resolved. There are many ways a trust can be used to specify how a gift can be accessed and used.
- Tax laws surrounding the item being passed down: Often, grandparents have an heirloom or item (like a vehicle, jewellery, or even a family cottage) that they wish to leave to the younger generation. Some of these items may have tax implications under probate law, so it’s important to review these intentions with an estate planning attorney and possibly a financial planner as well.
Leaving a gift to grandchildren through an estate plan can be a wonderful legacy for a grandparent. These gifts can help them get started in life, or can leave them with something valuable to remember their beloved family member. For help making estate plans that are reflect one’s intentions, including gifts to grandchildren if applicable, British Columbia estate planners can work with an attorney.