Deciding on inheritances takes time. As a grandparent, you may be contemplating the right assets to give each grandchild, but maybe you’re stuck on the best inheritance options for your grandchildren. Here’s a list of the best choices for executing your assets after you pass.
Granting Parents the Inheritance
In many cases, families find it appropriate to distribute assets to their grandchildrens’ parents, since young children won’t understand how to handle significant benefits such as money. When a parent takes over, they’re required to spend the money in a way that supports and benefits the child—if they’re allowed to spend it at all.
Parents are often the best choices to handle the inheritance a grandchild receives. In fact, some laws state that assets should automatically go to the parents first and then to the grandchildren.
Although direct inheritances are rare for children, some grandparents don’t trust their own adult kids with their inheritances due to fears that the funds won’t benefit the grandchildren. So they ultimately place a clause in their estate that divides up the funds, which are then directly handed out to the grandchildren as they come of age.
A direct inheritance can alsio happen when the grandparents’ parents were independently wealthy; however, this exposes the estate, which can cause taxes to skyrocket after the grandchildren receive their inheritances.
Inheriting Assets by Default
When grandchildren inherit by default, this generally means that whatever the parents inherit, the grandchildren will inherit later from the parents. The process then repeats with the following generations.
there’s also a chance that a child inherits assets from their grandparents if the child’s parents pass too soon. When this occurs, arrangements are made to accommodate the child and distribute the assets to them.
Inheriting as a Trust Fund
The last valuable option for a grandchild is a trust fund. To receive a trust fund, one must be emotionally, mentally, and financially able to receive the assets. In the case of a child with a guardian, the guardian can inherit the trust; under strict rules and laws, they can only use the assets in the child’s interest. For example, a child with a developmental disability can receive their trust through a guardian; the guardian does not have full ownership. Therefore, the guardian is only allowed to spend the money on the child’s needs, even when they become an adult. Additionally, minors must wait until they’re 18 or 21 to receive their monetary assets, depending on where they live.
Planning your estate will take time. As a grandparent, you’re likely in the last stages of planning your estate and executing your will. A lawyer can help you through the process and help you decide on the best inheritance options for your grandchildren as you finalize your estate planning.