Trust for Grandkids | Estate Planning and Law, Atlanta GA
Is there a difference between setting up a trust for your children or setting up a trust for your grandchildren?
An overarchingly no. A trust in both situations is going to say who gets what, when do they get it, under what restrictions do they get it, who is in charge before they get it, and of determining whether they get it. So structurally, no, there’s not a big difference. You can make a child or a grandchild beneficiary with relative ease.
There are two issues that do come to mind, specifically for the difference between children and grandchildren with trusts, though. The first one is the generation-skipping transfer tax. And that is where the IRS would like to get their chunk at every generational level. So if you are skipping a generation and going straight to a grandchild, as opposed to stopping at the child, they want to levy this generational-skipping transfer tax. Now, currently, that’s only for estates that are over 11 million or over 22 million for couples. So it’s not a huge issue for most of us.
On the other hand, taxation levels can change all the time. We are expecting some changes as I sit right now. And that may be more of an issue in the future. But generational-skipping transfer tax would apply to grandchildren, but not to children. The thing that actually is a difference that you may need to spend some time thinking about is trustees. It is relatively easy to pick someone of an appropriate age to be a trustee for your children. But if you’re waiting for a trust to benefit your grandchildren, oftentimes the person you chose 20 years, 30 years ago, 40 years ago, when it comes time to be trustee for grandchildren, is no longer available, possibly no longer alive. And you need a new trustee, a younger trustee, someone who’s currently able to do that job.
So a lot of thought has to go into the trustee process because sometimes, of course, it’s perfectly appropriate to say, “Ah, one of my children will be trustee for my grandchildren.” Other times you are making a specific choice about skipping that child. And part of that has to do with their money management. So picking a trustee can be more challenging for grandchildren, but it’s still the same process. It’s still the same setup. So, in general, no, it is not different having a trust for children versus grandchildren, but there are some individual smaller differences. If you’ve got more questions about this, or would like to set up trusts for either children or grandchildren, or any family members, including dogs and cats, I would be happy to talk to you. And also I welcome your comments, thank you.
Whether you’re in the Atlanta and Brookhaven areas, or in Cobb, DeKalb , Fulton, Gwinnett, or another county in metro Atlanta, we can help you. We can also work with executors by phone or video conference if they are out of state or far away. Only after listening carefully will we present the options that are right for you and explore the benefits and costs of each one.