When leaving money to our grandchildren for inheritance, do we have to leave a set amount all at once, or can we choose to have different amounts released to them over the years?
My spouse and I are 79 and 77 years old. We have $2,000,000 in assets and want to transfer some of that to our grandchildren when we pass. Instead of giving them each a set amount all at once, is it possible to give them certain amounts over the years? For example, can they receive $40,000 when they turn 40 years old, $50,000 when they turn 50 years old, and so on?
Yes, this is possible, but you will need to work with an estate planning attorney to create a trust with these instructions. Also, a trustee will have to be appointed to carry out your wishes through the decades. This could be a family member or a friend (whom the trust should pay for their efforts) or a hired corporate trustee. This could be an expensive proposition to plan and carry out, so decide how important it is to you to direct these assets from beyond the grave and then move forward with your attorney.
Yes, you could create a revocable trust to move the money into with your grandchildren listed as the beneficiaries. As part of the trust documents, you'd stipulate how those assets are to be disbursed and when. An estate attorney can help set this up properly for you.
In order to answer your question directly, yes you can. Your game plan is completely possible, but would require some planning on your part.
It would be key for you to consult with an estate planning attorney. As a side note, I would assure that you are working with an attorney whose specialty is estate planning and is not a general practitioner. Estate planning is a specialization that requires a special skill set. This will help assure that the planning you have done will be enacted.
In the end, your estate planning attorney will be able to formulate your distribution strategy in whatever way you prefer. Best of luck in setting up your plan!
Absolutely and this is a great use of estate planning and utilizing trusts. I've done this with my own estate and basically you can be as specific as you'd like. Typically a trust will say at certain ages they are entitled to certain amount of dollars, which you have full discretion on. Also they can typically get income out of the trusts each year as well. Basically a lot of ways to skin this cat most of which start and end with a good solid estate plan utilizing trust provisions.
There are two types of gift transfers to consider. Transfers during life and transfers upon death. It is common that a trust is set up to handle both types of transfers for the creators of the trust. The trust will have a trustee who is responsible for managing the wishes of the creators of the trust according to the written trust document. Howver, gifting during life does not require a trust but the creation of one often makes the administration of ones wishes easier. When leaving money to a grandchild that grandchild is considered a skip-person meaning they are 2 generations younger than the donor. This can be important if the donor's estate is more than the Estate Tax and Generation Skipping Transfer Tax exemption amount of $11,200,000 per donor.
It is common for assets to be given to heirs at pre-determined milestones such as certain ages or after certain life events such as graduation college or marriage. If subject to a trust the trustee has a fiduciary role with respect to management of the assets and to the beneficiaries of the trust. There are two types of beneficiaries the current beneficiaries and the remaindermen who are named to receive trust assets. Often there are spendthrift clauses or provisions included in these trusts to prevent a beneficiary from giving away their right (assignment) to a future gift they hope to receive to a third party. Trustee are typically given some discretion over whether a beneficiary will receive a benefit as well. This allows for a trustee to make sure that the beneficiary is not using the benefits of the trust in a manner that is harmful.
It is important to understand that there are some potential tax issues to consider. Most notably the Gift Tax for transfers during life and the potential for some of the Generation Skipping Transfer Tax. There are limits on the exemption amounts. Annual exclusion amounts for gifts is currently at $15,000 in 2018 and will be adjusted for inflation over time. There are additional exemptions from Gift and GST Tax for directly paying for medical and tuition expenses. The Generation Skipping Transfer Tax exclusion amount is now $11,200,000.