Give Gifts to Your Grandchildren in Trust

There can be serious drawbacks to “gifting” to grandchildren. You could lose control of how the funds are used or the money could affect you and your grandchild's eligibility for financial aid in the future.

Avoid the problems with “gifting” by transferring money into a trust.

Legally Remote, PLLC can draft a trust that reflects your express wishes about when the income and principal will be available to the grandchild, and even how the funds will be spent.

Transferring funds into such a trust offers the following benefits:

(1) You can reduce the size of your estate by transferring up to $16,000 (in 2022) into each trust you create for each grandchild. No gift taxes will be due in connection with the transfers;

(2) Although the trust owns the assets, you control them as trustee and can decide what type of investments to make;

(3) Income earned by the trust from amounts that you've deposited will not be taxed to you; the trust pays the taxes;

(4) Amounts deposited in trust, and the income earned from those funds, will be used for the benefit of your grandchildren; and

(5) You can provide that the trust terminate at any age you specify.

In order to qualify for these benefits, a Trust should not be set up without the help of an experienced attorney. Although there is the initial cost of establishing and maintaining a Trust, the return on investment often exceeds the cost.

Only make gifts if you feel certain that the amount of funds remaining in your name and the amount of income they will produce will be adequate for your needs. In other words, only create a Trust… you can trust.