While creating an estate plan many people wonder how they can give assets to minor grandchildren at the time of their death. Questions arise such as: what if something were to happen to them before the grandchildren become adults? Can there be terms established so the minor grandchildren do not get control of any inheritance until they’re adults? Can arrangements be made for any unborn grandchildren to be included?
Nj.com’s article entitled “How can I leave my money to my minor grandchildren when I die?” says that one way to solve these issues is to create a testamentary trust to provide for young beneficiaries whether they’re children, grandchildren, step-children, or unrelated beneficiaries. The terms of a testamentary trust are in your will. It is only established and funded after you pass away.
The terms of the trust generally provide instructions to the trustee about the ages at which distributions must be made, if any. These instructions also allow the trustee to make discretionary distributions of income and principal to the beneficiaries.
Beneficiaries do not need to be identified by name or need to be born at the time the will is written. However, they must be able to be identified upon your death. As a result, you can provide a bequest to all of your grandchildren, whether or not they are born yet. However, it is important to make sure you have updated and properly completed all of your beneficiary designations as well so that the assets will transfer in accordance with your wishes.
It doesn’t matter where your grandchildren live as far as estate planning is concerned. However, if they live outside the United States and the bequest is considerable, the laws of their home country should be addressed. This is because a big gift may cause adverse tax implications to the recipient.
When naming a minor or another as primary beneficiary in your Will, one should also name one or more contingent beneficiaries, so that if the first person predeceases, you will not have to revise the will. If you do not designate a contingent beneficiary, and an heir predeceases, the assets pass according to the state’s intestacy statute rather than according to the will.
If your preference is that assets be held in a testamentary trust for the management of the funds until the minor grandchildren reach an older age, it is important to make sure you Will will be the controlling document. You should consult with an experienced estate planning attorney to make sure your plan to give assets to minor grandchildren will be created and managed properly.
Reference: nj.com (Dec. 9, 2021) “How can I leave my money to my minor grandchildren when I die?”
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