Estate Planning is a significant part of my legal practice. Many seniors see me to update their existing Wills or to prepare new Wills for them. I find that a common motivation for updating their Wills is the arrival of a new grandchild into their family. Of course, grandchildren are a tremendous gift, and many grandparents wish to leave something to their grandchildren in their Wills as a small token of the love and joy that they feel towards them, and also to help their grandchildren face the financial realities that lie ahead.
There are many different ways that you can leave a gift to your grandchildren as part of your estate plan. Here are a few possible options.
GIFT DURING YOUR LIFETIME
Perhaps one of the most obvious, but sometimes overlooked, options is to provide a monetary gift to your grandchildren while you are still alive. You can do this in a lump sum, or spread the gifts out over several years. With this option you are able to experience the joy and benefit that you are providing to your grandchildren as opposed to only leaving them an inheritance in your Will.
PERSONAL ITEMS
Of course the most valuable item that you leave to your grandchild may not be money. You likely have personal items that have provided for special memories with your grandchildren. These items may range in size from a small toy car up to a full-sized classic car that you have in storage waiting for your grandchild to turn 16. I commonly have grandparents give certain items of jewelry, which have been in the family for many generations, to their grandchildren in their Wills.
CASH LEGACY
A cash legacy is simply a gift of a specified amount of money to a certain person or group of people, for example $1000 to each grandchild. Keep in mind it will be necessary for your lawyer to include special wording in your Will if you wish for this amount to increase with inflation.
PORTION OF YOUR ESTATE
An alternative to leaving a specific dollar amount to your grandchildren in your Will is to leave them a certain percentage of your estate. A benefit of this method is that the amount of your estate provided to your grandchildren will change proportionately if the value of your estate increases or decreases prior to death.
TRUST FOR GRANDCHILDREN
If you provide a specified portion of your estate to your grandchildren, it is important that you discuss the implications of such a gift with your lawyer if you have, or may have, grandchildren under the age of 18 years. You may also wish to specify a later age, for example age 25, until which each grandchild’s portion of your estate must be held in trust for them.
EDUCATION TRUST FOR GRANDCHILDREN
It is possible to allocate a portion of your estate in trust for the benefit of grandchildren that may be attending college or university after your death. Such a trust would provide your Estate Trustees with the discretion to determine if, how much, and how often money will be paid out of the education trust to the grandchildren. Typically expenses such as tuition fees, book costs, computer and technology expenses, rent and living costs, and travel expenses, would be approved by your Estate Trustees as part of an education trust.
REGISTERED EDUCATION SAVINGS PLAN
If you are a subscriber of an RESP for the benefit of your grandchildren, you can direct in your Will that your Estate Trustees continue to make contributions to the RESP after your death. Alternatively, you can direct your Estate Trustees to make a payment to the parent or guardian of your grandchildren to ensure an RESP is maintained for their benefit.
CONCLUSION
As you can see there are many options when considering giving a portion of your estate to your grandchildren. Of course, you can also combine more than one of these options in your estate plan to provide a valuable gift to your family’s next generation.
Jason P. Mallory, H.B.A., J.D.
For more information visit Kerr Wood & Mallory
