Tips for Giving Money to Grandchildren

8:36 pm California Trusts, Estate Planning, Tax Planning

grandchildren e1379622938556 Tips for Giving Money to GrandchildrenGrandparents and grandchildren have a special relationship.  As grandparents, you get to have the joy of being around children you are related to but not directly responsible for.  And grandchildren have someone to turn to who aren’t their parents.

So it’s natural that grandparents like to find ways to reward this special relationship, including financially.  Here are some great ways that grandparents can give money to grandchildren and help their own bottom lines through estate and tax reduction:

Direct contributions.  Each grandparent can gift up to $14,000 in 2013 without having it count against their lifetime gift tax exemption – and married grandparents can double that, for a total of $28,000 per grandchild.

Custodial account.  A parent can set up a custodial account for a minor child, which a grandparent can contribute to for the benefit of that child.

Indirect contribution.  Grandparents can pay for educational or medical expenses with no limits, so long as they make the payments directly to the educational institution or medical provider.

529 account.  Grandparents who want to contribute to a child’s college education can use a 529 account, which will also help reduce your taxable estate.

Trusts.  Grandparents can establish a trust and name a grandchild or grandchildren as beneficiary.

IRAs.  Grandparents can use other gifting strategies like contributing to an IRA or savings bonds for grandchildren.

If you’d like to learn more about estate planning strategies for providing a secure financial future for your family, contact our Orange County law firm.

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