There are various ways for grandparents to pass their wealth down through the generations. Some choose to give money outright as a gift. Others might directly pay for things like medical expenses or help pay for higher education by covering the cost of tuition. If you’re a grandparent working on your estate plan in Maryland, it’s helpful to know your options.
What Are The Benefits Of A Trust?
Another estate planning option is to establish a trust. This can give you more freedom and control over how your grandchildren receive the funds and when they get them.
You can often specify the way the funds will be used. This allows you to spread their inheritance out so that they get them at the times when they’ll need the money the most. This might include milestones such as when they graduate from college or get married.
When you use a trust, it can serve as a way to prevent an inheritance from being depleted. This commonly can happen when the inheritors aren’t financially literate, but it’s not hard for anyone to deplete their funds when they run into financial difficulties.
Trusts are also there to assist your grandchildren so they can reach certain goals. Whether they want to buy a house or start their own business, this is one way to help make it happen for them.
When you establish a trust during your lifetime so you can transfer funds to your grandchildren, it usually comes in the form of an irrevocable trust. This means that once it’s formed, you generally can’t go back and change things or reclaim the funds.
Make Sure To Find The Right Trustee
Be careful with your trustee selection. This is the person or entity who usually has to give approval for the funds from the trust to be distributed. The trustee also handles the reporting and recordkeeping
In some cases, a member of your family can fill this role. However, it might be a good idea to go with a third party because they may be able to offer a more objective viewpoint.
When you form a trust, it’s important to think carefully about what your estate planning objectives are. A trust can be a helpful tool to pass your wealth down to your grandchildren and benefit them in a variety of ways.