As estate planning lawyers we regularly meet grandparents who ask how to leave their inheritance to their grandchildren. This is especially common with wealthy families, who have a lot to share amongst their heirs.
Whether you want to give your grandchildren the best possible chance in life, or there are relationship issues with your immediate children, then it can be worth considering. However, how you leave an inheritance to your grandchildren can have a significant impact on their lives.
We advise you to take the time to read the information below before consulting with a Florida estate planning lawyer.
Read Related: How to Talk to Your Parents About Making Their Estate Plan
How to Leave Your Inheritance to Your Grandchildren in Florida
If you want to leave your inheritance to your grandchildren who are minors, then you have various options available:
Leaving Money with Parents
Firstly, the most common route is to leave the funds with your grandchildren’s parents with the wish that the money is used for the grandkid’s best interest.
It prevents minor grandchildren from obtaining large sums of money at a young age.
However, this is far from wise if you have concerns over the parents’ spending habits and ability to maintain your wishes.
Alternatively, you can name your minor grandchildren as beneficiaries in a will with a specific amount of percentage of your estate. We see this in cases where the parents aren’t trusted to receive the funds, or there are accidents or illnesses in the family.
However, this option is often advised against when it comes to minor children. Receiving large sums of money or assets at a young age can be a bad idea. Minors can become irresponsible with spending, overwhelmed or it can cause tensions within the family.
It can also cause hassle with estate planning, as a conservatorship may be required depending on the amount of money left.
Perhaps the best option for leaving your inheritance to your grandchildren who are minors is via a Trust.
A trust can hold the funds and assets until a predetermined date or milestone; at which point your grandchildren can then access the benefits.
Read on below, where we describe the different types of trusts used to leave an inheritance to grandchildren in Florida.
Read Related: How to Include Stepchildren in Your Estate Plan in Florida
Leaving your inheritance to adult grandchildren is generally a simpler task. In most cases, they’ll be of a mature age to be responsible and handle the wealth you leave them.
However, if your adult grandchildren are considered irresponsible with their finances or not yet ready to inherit large sums then you may need to think carefully. This is often the case with grandchildren who have only recently turned adults or are still completing their studies.
The easiest way to leave an inheritance to your adult grandchildren is via your will. You can simply name them as the beneficiaries of a designated figure or percentage of your estate, and they’ll receive it after probate is complete.
Just like with minor children, leaving a share of your estate for your grandchildren in an estate can ensure responsible spending and asset management.
This can also be wise if you have multiple adult grandchildren and you’d like assets such as real estate to be managed in their best interests.
Read below to see the different types of trusts commonly used to leave an inheritance to grandchildren in Florida.
Types of Trusts Used to Leave Inheritance to Grandchildren
Trusts are great options for leaving an inheritance to your grandchildren as they’re flexible and ensure appropriate asset management. From spending and sales to the date when access is allowed, they’re suitable for minor and adult grandchildren.
For example, you could state:
- A grandchild gains access to funds at a designated birthday, at their marriage, after college graduation or after the birth of a child.
- That asset must be sold after a predetermined number of years, such as when all grandchildren leave home or when the market is suitable.
Choosing a trustee (the person who is responsible for the management of trust assets) is a decision that should be considered very carefully. This will be a person who decides how assets are managed and will later distribute them to your grandkids.
Living trusts allow you to control the distribution of your estate until the day you pass away. You can edit and amend them at any moment. They also hold the title of assets to bypass probate.
They can be suitable for leaving an inheritance to your grandchildren, as your intentions may change as they get older or new grandchildren or marriages arise.
Irrevocable trusts are similar to living trusts, except you cannot change or cancel them once they’re created. The benefit however is that you can reduce your estate taxes and protect the assets from creditors.
Health and Education Trusts
Health and Education Trusts (HEET) are special types of trusts that benefit from certain tax code provisions which exclude lifetime gifts paid to healthcare and education institutions on your grandchildren’s behalf.
A HEET’s funds can be a wise idea if you’d like to support your grandchildren with their education and medical expenses; if you’ve used up your GST tax exemption; or if you want to benefit a charitable organization.
Please contact our Florida estate planning lawyer if this is your intention.
Generation Skipping Trusts
Grandparents can use Generation Skipping Trusts to allow assets and money to pass directly to their grandchildren. This can also reduce the impact of estate taxes on the family’s wealth.
These trusts are quite complicated financially and legally, so expert legal advice is necessary.
These trusts cannot be amended once created, but do allow your estate to effectively miss a round of estate taxes (as they’d usually pass through your children first). In this way, more wealth remains in the family.
Read Related: What Are Generation-Skipping Trusts?
Keep the Parents Involved
It’s advised that you keep the grandchildren’s parents in the loop with your intentions. If not, nasty reactions may occur (either for you now, or for your surviving relatives after your death).
Resentment is a painful experience to recover from for all involved. With some clear communication with your children beforehand, you can help them understand your intention so they’re appreciated. This is also why trusts are often best, as the grandchild only gains access to funds when terms or conditions are met (which can be discussed with your children).
Contact an Estate Planning Attorney Today in Riverview and St. Petersburg
If you’re considering leaving your inheritance to your grandchildren in Florida, then our Florida estate planning lawyers can help. Whether you want to create a trust, draft your will correctly or explore other options, look no further than our award-winning team.
We welcome you to contact our Florida estate planning attorneys today for a free assessment if you have any questions or wish to get started.
Battaglia, Ross, Dicus & McQuaid, P.A. is U.S. News and World Reports Tier 1 law firm in Florida, specializing in Estate Planning & Probate since 1958. With Award-winning experienced estate planning attorneys, they can help you create an estate plan that protects your rights and wishes.