How Do I Give Assets to Minor Grandchildren in My Will?
If a married couple is creating its estate plan, then how does the couple leave the estate to non-adult grandchildren?
However, what if something were to happen to them before the grandchildren become adults? Can this couple make sure the minor grandchildren do not get control of any inheritance until they’re adults?
Can arrangements be made for any unborn grandchildren to be included?
Nj.com’s recent article entitled “How can I leave my money to my minor grandchildren when I die?” says that one way to solve these issues is to create a testamentary trust to provide for young beneficiaries whether they’re children, grandchildren, step-children, or unrelated beneficiaries. The terms of a testamentary trust are in your will. It is only established and funded after you pass away.
The terms of the trust generally provide instructions to the trustee about the ages at which distributions must be made, if any. These instructions also allow the trustee to make discretionary distributions of income and principal to the beneficiaries.
Beneficiaries do not need to be identified by name or need to be born at the time the will is written. However, they must be able to be identified upon your death. As a result, you can provide a bequest to all of your grandchildren, whether or not they are born yet. Under the Louisiana Trust Code, this is called a “class trust”, meaning that all of your grandchildren are beneficiaries of the trust as a “class”.
It doesn’t matter where your grandchildren live as far as estate planning is concerned. However, if they live outside the United States and the bequest is considerable, the laws of their home country should be addressed. This is because a big gift may cause adverse tax implications to the recipient.
For children, you can provide a clause in your will that provides that any of them that contest or challenge your bequest to your grandchildren are penalized (or outright disinherited) for contesting the will. However, if there’s probable cause initiating a proceeding concerning the estate, then the clause will not be enforced.
When a person names another as primary beneficiary, they should also name one or more contingent beneficiaries, so that if the first person predeceases him or her, they will not have to revise the will.
If you do not designate a contingent beneficiary, and an heir predeceases, the assets will pass according to Louisiana’s intestacy statutes rather than according to your will.
Often, you will also want to make this trust a “spendthrift trust” for asset protection purposes. A spendthrift trust is explicitly permitted under the Louisiana Trust Code. A spendthrift trust prohibits the grandchildren or beneficiaries from transferring their interests in the trust, and prevents creditors and predators of the grandchildren from seizing the grandchildrens’ inheritance.
BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.
If you liked this article, “How Do I Give Assets to Minor Grandchildren in My Will?” read these additional articles: How to Protect Valuable Assets in Estate Planning and Social Security Retirement Age Changing and What Does that Mean to Payment? and How to File Tax Return When Mom Passes Away and What’s a Medicaid Annuity?
Reference: nj.com (Dec. 9, 2021) “How can I leave my money to my minor grandchildren when I die?”