I always enjoyed reading Ann Landers in our local paper as a lad. Although I disagreed with her positions on some social issues, it seemed she really understood basic family dynamics.
One of my all-time favorites? When Ann responded to a disgruntled grandmother whose spoiled, "take-it-for-granted-grandchildren" never acknowledged the checks she would send them for birthdays, as Christmas gifts and for graduations.
Not even so much as a "thank you," mind you!
Next time "forget" to sign the checks before you mail them.
I told you Ann Landers was a wise soul.
While we are on the subject of giving to grandchildren, a recent article from The Motley Fool, titled “Thinking of Gifting an Inheritance to Your Grandchildren? Keep These 3 Things in Mind,” has some trustworthy tips to consider.
Set up a Trust. Who wants to see the grandchildren squandering their inheritance? After all, it took hard work and thrift to create the inheritance in the first place, yes?
Very few young people have the appropriate financial skills to properly manage money. In fact, a 2012 study found that 23% of millennials spend more than they earn.
Hmmmm. Not good.
Then, again, the parents of these millennials may not be any better stewards when it comes to their own financial resources.
Sad, but true.
The original article suggests setting up a trust. Not only is this a wise move if you intend to pass along a substantial amount of money, but it can help you avoid probate in the process.
Through a trust you can control how and when an inheritance can be distributed to your grandchildren.
Not only can this keep them from being overwhelmed, but it can give them a chance to mature and develop their own financial stewardship.
That way your grandchildren can better handle the inheritance should they receive any outright distributions later on.
Know about Estate Tax. When leaving an inheritance to your grandchildren, remember the estate tax.
This tax will be applicable if your total estate is valued at more than $5.43 million for 2015 (or $10.86 million for a married couple). If this applies to you, consider giving the grandchildren money while you are still alive.
The IRS allows a $14,000 tax-free gift each year per person, and that works for both you and your spouse ($28,000).
There are many ways to skin the proverbial "wealth transfer cat" (sorry cat lovers, it is just a figure of speech).
Contact an estate planning attorney to review your estate planning and estate tax situation.
And, remember: Don't sign the checks!
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: The Motley Fool (April 26, 2015)“Thinking of Gifting an Inheritance to Your Grandchildren? Keep These 3 Things in Mind”