Best Way To Gift Money To Grandchildren in Louisiana

Whether you are proud of your children’s success or wish they had made better choices, it has probably occurred to you that your grandchildren have quite a struggle ahead. College costs are soaring, and with so much uncertainty in the world, it will likely be difficult for them to make their own way without a little help.

If you have the means to provide that help, you want to be cautious about how you proceed. Many grandparents make the mistake of gifting money to their grandchildren in such a way that it results in unexpected financial burdens. Taking a few simple steps can help you protect your grandchildren from these burdens so your gift will do the most good possible.

Trusts and other options

Leaving an outright inheritance to your grandchildren is often a mistake. Unless your grandchildren are already financially savvy, it is more likely that they will blow the windfall without a plan for more prudent spending. One recommended way of passing your wealth to your grandchildren is through trusts. A revocable living trust may help you reach your goals in the following ways:

• You can control the assets you fund to it then pass that control over to a trustee you assign.
• A trust can include specific instructions for how your grandchildren may use their inheritance.
• You can change the assets or the terms of the trust while you are living.
• Assets in the trust bypass probate.
• You may spare your grandchildren certain tax ramifications by placing their inheritance in trusts.
• The inheritance you pass along to your grandchildren remains confidential, unlike the terms of your will.
• Even if you do not have a high-asset estate, a trust is often a safe way to transfer wealth.
• If you prefer not to create individual trusts for each grandchild, a pot trust is a single trust you can create for all your grandchildren with one trustee.

If you have no qualms about the way your grandchildren will manage their money, you can make annual gifts to each child up to the exclusion limit set by the IRS without facing a gift tax. Some grandparents take this opportunity to instill financial responsibility in the children, which their parents may not always have the funds to do. However, your decision about how to pass your wealth on to your grandchildren is one you should make carefully while considering every factor.