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What grandparents need to know about estate planning

On Behalf of | Dec 5, 2022 | Estate Planning |

If you utilize the right estate planning tools in an optimal way, it may be within your power to provide financial stability and security to your family for generations to come in Maryland. This also applies to anyone in your family who might not be able to support themselves once they reach adulthood.

Make sure your grandchildren’s futures are secured

One simple way of doing this is by simply leaving your grandchildren’s assets from your estate. Another way to do this is to make them life insurance beneficiaries. This not only sets them up with the money they need but makes sure that it’s spent responsibly and effectively.

One of the major factors that play into your estate plan as a grandparent is if the grandchildren have grown up already or if they’re still in their childhood years. In either case, there are still preparations you can make to ensure the very best for their financial future.

One thing for grandparents and grandchildren alike to be aware of is the GST tax. This generation-skipping transfer tax is added on top of the gift tax and estate tax, so you’ll want to make sure it doesn’t get left out of your calculations.

Set them up with a strong education

You might also want to think about how you can help cover the myriad costs of education for your grandchildren. This is especially true if they are at that age when they’re about to graduate high school or are already in the midst of working towards a high-level degree.

If paying for schooling is on your list of concerns for your grandkids, there are a few options you can use. You can pick between putting your assets into a Uniform Gifts to Minors Act account, a Uniform Transfers to Minors Act account or a 529 plan. Each of these may be a good way to lower your taxable estate’s value in the process of saving up money for the next generation’s education.

With 529 plans, control is maintained over the account up to the point at which the assets are taken out. Because of this, you might want to include updating the designation of your successor in your estate planning process. This is the person who will be in charge of the account once you’ve died.

If you have grandkids with special needs, you’re likely to have a lot of thoughts and concerns about their financial future. In some instances, you can help set up their future with strategic estate planning.