Several circumstances should be considered when planning to leave an inheritance to minor grandchildren.
Becoming a grandparent brings fresh joys.
There is something special about seeing your children have children, yes?
Your love grows and expands as your family changes.
According to a recent Nj.com article titled “How can I leave my money to my minor grandchildren when I die?,” many people want to change and expand their estate plans as their families grow.
Estate planning for minor grandchildren triggers a barrage of questions.
These include thoughts about how to arrange for the grandchildren to receive an inheritance without squandering it, who will care for the assets until the minor becomes an adult, and whether unborn grandchildren can be included.
One option would be to utilize a last will and testament to establish a “testamentary” trust to administer the inheritance.
By including the terms of the testamentary trust in your last will and testament, a trust will be created and funded after you have died.
Within the terms of the trust, you can describe the “ages” or %stages” when each beneficiary “shall” or “may” receive distributions from the trust.
You also can give the trustee the authority to make discretionary distributions of income and principal to the beneficiaries, even providing incentives to reward positive behaviors.
With a testamentary trust, your grandchildren do not need to be born or named when you create the last will and testament.
By simply leaving a bequest to all of your grandchildren, you can include those who have been born between the time of its creation and the time of your death.
To receive an inheritance, your grandchildren will need be able to be identifiable when you die.
If your minor grandchildren live in a different state, it is not a concern when it comes to the creation of your estate plan.
If they live in another country, then you may need to address the laws of the home nation if you are leaving a significant sum.
Without doing so, you can trigger significant taxes from the IRS and the home nation.
What can you do if you want to disinherit any of your children or grandchildren?
Will this lead to a “will contest”?
You may be able to include provisions in your last will and testament to penalize anyone who contests your estate plan.
This clause will not be enforced if the courts have cause to consider the challenge based on problems with your estate or estate planning.
For example, did you forget to identify by name or by relationship the person or persons you intend to disinherit?
Be mindful of unique state law requirements here.
You should also pay attention to beneficiary designations in your estate planning.
In addition to designating a primary beneficiary, you should also include a contingent beneficiary.
Sometimes the primary beneficiary will die before you do.
Failing to provide a contingent beneficiary or update these designations means these assets will be included in your estate when you die.
Instead of being distributed to according to your last will and testament, these will be disbursed to heirs according to the intestacy laws of your state.
Whether your are wanting you include your minor grandchildren in your estate plan or simply leave assets to your adult children, working with an experienced estate planning attorney can help you accomplish your goal.
If you want to avoid probate, then ask your estate planning attorney about the benefits of creating, executing, and funding a revocable living trust.
Reference: nj.com (Dec. 9, 2021) “How can I leave my money to my minor grandchildren when I die?”