Estate Planning: What Is The Best Way To Leave Money To A Grandchild?

Are you a grandparent in Massachusetts who is reviewing your estate plan? If so, you may be considering the best way to leave money or property to your grandchild(ren). There are a number of different options available to do so. At Fisher Law LLC, we help people and families find the best solution for their specific situation. Here, our Norwood estate planning lawyer provides an overview of considerations for leaving money to a grandchild as part of your estate plan.

 Your Estate Planning Options for Leaving Money to a Grandchild (Pros and Cons) 

Will 

• Pro: A will is simple to draft and allows you to name your grandchild as a direct beneficiary. It ensures your wishes are legally documented and will be carried out through probate court. It is a very straightforward way to leave money to a grandchild.
• Con: Distributions through a will must go through probate, which can be time-consuming and public. If your grandchild is a minor, a court-appointed guardian may be required to manage the funds. That can complicate matters. Further, you generally cannot leave restrictions on money for a grandchild when only using your will. 

Trusts 

• Pro: Trusts offer much greater control. You can specify when and how your grandchild receives the funds. Restrictions could require funds to be used for education or held back until they reach a certain age. A trust can also avoid probate.
• Con: Trusts are not the best option for every situation. Trusts are more complex and expensive to set up and maintain than a will. Further, grandparents will also need to name a reliable trustee to manage the funds responsibly. 

Uniform Gifts to Minors Act (UGMA) Account 

• Pro: UGMA accounts are easy to create and allow you to transfer money to a grandchild while maintaining some control as the custodian until they reach the age of majority. In Massachusetts, that age for UGMA is actually 21 years old.
• Con: Once the grandchild reaches the legal age, they gain full control of the funds. That is true no matter his or her actual maturity. The funds also count as the child’s asset for financial aid purposes. That could reduce eligibility for college financial aid. 

529 Plan 

• Pro: A 529 plan grows tax-free and allows for tax-free withdrawals when used for qualified education expenses. You retain control as the account owner for the remainder of your life and you can change beneficiaries if needed.
• Con: Funds must be used for education-related expenses. Otherwise, earnings may face taxes and penalties. Investment options may also be limited. Though, Massachusetts does have a number of different options available for 529 plans. 

Consult With Our Massachusetts Estate Planning Lawyer Today

At Fisher Law LLC, our Massachusetts estate planning attorney is standing by, ready to provide support. If you have any questions about leaving money to support a grandchild as part of your estate plan, we can help. Contact us today for a completely confidential initial consultation. We provide estate planning services to grandparents in Norwood, Boston, and throughout the region.