As a grandparent, you may be looking at your estate plan form the first time or coming back to edit it years down the road from your initial documents. Now is the time to think about who you want to receive assets and how you want to pass it on, which can raise questions around whether or not you need a trust.
You may have heard about multiple options to pass on assets to your loved ones. Many grandparents are interested in figuring out the most effective way to set aside gifts for loved ones, such as grandchildren. This can include everything from direct gifts to passing items through a will through making contributions to a 529 plan to establishing trusts.
There are pros and cons to each one of these approaches and working with an estate planning lawyer can help you better align your gifting strategy along with your individual tax and estate situation. Trust funds are legal entities that hold assets to be managed for someone else. These assets are managed by a trustee, and then the funds can be distributed to beneficiaries based on stipulations you outlined in the trust. There are tax advantages available with certain types of trusts so long as you select the appropriate one and fund it properly. Trusts can also avoid probate in addition to providing potential tax advantages. Trust funds also give you a greater degree of control over how and when the assets are distributed to your grandchildren.
You may decide to establish specific milestones at which the funds inside the trust can be released to your loved ones, such as when they reach a certain age or graduate college. With so many different types of trusts available, it’s important to have a conversation about your individual assets and personal goals and discuss these issues with an experienced estate attorney in Pasadena.