If you become a grandparent, it is a good time to update your existing estate plan. If you don’t have a plan yet, then it’s a good time to draft one. This is a significant life change and needs to be addressed.
To begin with, many grandparents simply want to include these new grandchildren in their estate plans. Maybe you have two adult children, so you always just assumed that your assets would pass to them. But adding in a grandchild means that you want to divide things up a bit differently, making special considerations to pass financial or tangible assets on to this new member of your family. Every time a new grandchild is born, you may need to re-examine the plan to determine how you want to adjust things to account for them.
Can grandchildren inherit?
Grandchildren can inherit, but minors cannot. This is another reason why you want to make an estate plan. If you pass away unexpectedly and without a plan, a minor grandchild cannot inherit financial assets from you.
You can get around this with an estate plan, however. For instance, you could set up a trust fund that will hold some of your assets. Your new grandchild can be the beneficiary of the fund. Although they cannot actually withdraw money from the trust until they turn 18, this financial account protects those assets and ensures that they are waiting for the grandchild at the appropriate time.
Furthermore, you can use a trust to leave instructions for how the grandchild should use the money. Many grandparents will create a fund that is intended to help pay for college tuition, for instance, as educational costs in the United States continue to soar.
If you are interested in drafting an estate plan, be sure you know exactly what legal steps to take.