How to pass wealth down to your grandkids

By Richard A. Courtney, CELA/OURNEWS

   “So you’re here to do some estate planning. What are your goals?” I asked Martha, a lovely lady I her 60s. “Well, I want to help my children out if they need financial help, but I really would like to leave something to my grandkids.” 

“Great,” I replied, “then I have a few questions for you.

   “What do you want to pass to your grandkids? Money is not the only thing of value, and a large gift of money can often destroy the incentive to work and achieve positive life goals.”    Many of our clients wish to convey certain virtues and values as part of their heritage. You can provide in your will or living trust that distributions of money or property will be paid from your estate for the education (including graduate school), wedding, or purchase of a first home for a child or grandchild. You can easily create an “incentive trust” that will make payments to the child or grandchild as a reward when he attains certain grades in school, makes a contribution to his own retirement savings plan, completes some charitable service project, or starts a business. Planning in your estate plan documents for such distributions will show the younger person the value you place on such activities and accomplishments and may help instill such values in him.

   How old are your grandchildren? Mississippi law does not permit a person under age 21 (a “minor”) to inherit money or property directly. If such a young person is to receive an inheritance gift, a court-appointed guardian must be designated to manage those assets until the minor reaches age 21.  One or both surviving parents of the child will be presumed to be the best guardians (unless a parent has been determined by a court to be unfit). The guardian will not be able to spend funds from the inheritance without court approval, and an accounting of the entire inheritance in the guardianship just be filed in the court each year. An alternative to this result is to create a trust in your will or living trust and designate a trustee (or co-trustee) who will be able to manage the inheritance in keeping with the instructions you place in the trust, without court supervision and public accountings.

   How do you want payments made to your heirs? You can distribute wealth in more than one way: (a) You can make gifts of money or property directly to a family member while you are living. If the total value of our estate is less than two million dollars, you may be able to give any amount without any tax consequences to you or the recipient. If our estate value exceeds two million dollars, you may still gift up to $12,000 per person per trustee to make a cash payment to the child immediately upon your death. (c) You can create a trust in your will or living trust that will hold assets for a specific period of years or until the child reaches a certain age, and the trust can provide those payments of set amounts or percentages of the trust will be made at periodic intervals until the final payout. Such trusts can prevent the immediate payout of a large sum that may be more than the beneficiary can manage, making sure that the assets will be paid out over time when it is most useful. Additionally, a trustee may be given authority to withhold payments to a beneficiary who suffers from a substance or gambling addiction, harmful lifestyle, bankruptcy, divorce, or other financial problem during the term of the trust, with such payments to be resumed when the problem is resolved.

   Once Martha was able to answer those questions for us, we were able to create a plan and draft the documents necessary to pass on the wealth of values and financial resources that she has acquired to her heirs in ways that will express her generosity, enhance their quality of life, and encourage their imitation of her wise planning for their own descendants., To accomplish this for your family, contact us today at 1-866-ELDERLAW (353-3752. For more information, visit elderlawms.com.