Becoming a grandparent can be a very exciting event for any parent. Grandchildren can be a great source of joy, excitement and love. This is why it can be crucial for grandparents to take their grandchildren into consideration when it comes to estate planning.
Many people will create or update their wills or other planning documents when they have a child, but it can be just as important to do this when a grandchild comes into the picture. In many ways, the same considerations should be taken into account for grandchildren, but there are some unique differences that should be addressed.
For example, a grandparent may have plans to leave money or a home to their adult children. Adults are better equipped to deal with sudden influxes of finances, but grandchildren may be too young to understand the reality of managing money. Setting up a trust can be a good way to maintain some control over when and how often a child receives payments.
Another factor that grandparents should consider is balancing their own financial needs for retirement with the distribution of their assets. Some people may want to give financial gifts to grandchildren as soon as they can. However, retirement is a time when people should be careful to manage their finances and plan for medical costs and living expenses in order to stay financially independent.
Many grandparents often have complex and long-term investments in place. Having the support and guidance of how to continue to best maintain these and avoid the troubling effects of market volatility. When grandchildren are added to a family, there are more people who will be affected by risky or spontaneous investment decisions.
Working to develop an effective estate plan that protects and provides for children and grandchildren can be one way to stay on track and take control your financial affairs. With financial and legal support, people can discuss their options and make decisions that achieve their goals.
Source: The Spectrum, “Plan your legacy for grandkids,” Derrick Martinez, Sept. 1, 2014