If you are a grandparent, you likely want to make sure that your grandchildren are taken care of financially after you pass on. You may plan to supplement their college funds but are not sure how to best do it.
One way to assist them is to designate some of your assets into a 529 plan. You also might want to look into either a Uniform Transfers to Minors Act (UTMA) account or a Uniform Gifts to Minors Act (UGMA) account. Funding these accounts also has tangible benefits during your lifetime, as your contributions can reduce your taxable estate’s value, so you owe less to Uncle Sam.
With a 529 plan, you have control of the account as long as there is no money withdrawn. But one caveat — you will need to designate a successor in your estate planning documents. That person will assume the management of the 529 account after your death. In fact, you should include transfer on death (TOD) designations for all of your eligible accounts.
Another handy estate-planning tool is a trust. There are many benefits to funding trusts for your grandchildren beneficiaries. You also can control when the beneficiaries will receive money from the trusts and impose conditions for the disbursements. If the children are still minors, you may have concerns about their future ability to responsibly manage the trust. Sometimes, adult grandchildren may also be unable to be good fiscal stewards of large sums of money. Spendthrift trusts are one option for the above cases. A trustee appointed by you will manage the trust and its assets and will be the one who disburses funds to your heirs under the conditions that you establish.
Your North Canton estate planning attorney can help you determine the right financial vehicles to use to leave your assets to your grandchildren.