The love of a grandparent for a grandchild is a special love. If you are a grandparent and considering making gifts to your grandchildren, there are several options for doing so. In this blog, we touch on a few of them.
- Education and Medial Costs. While the IRS limits annual gifts an individual can make to $16,000 per recipient, this limit does not apply if you pay for education or medical costs directly to the provider. If your grandchildren are in private school or college, you can pay an unlimited amount directly to the school. Additionally, if your grandchild has medical costs, you can pay the provider directly and there is no limit. These gifts if paid directly to the provider, are in addition to the $16,000 annual gift exclusion.
- 529 Accounts. If you wish to make gifts that can be used for your grandchildren’s higher education, you might consider opening a 529 account for them. Georgia taxpayer receive a tax deduction for contributions to the Georgia Path2College 529 Plan. Additionally, the contributions to 529 Plans grow free of both Federal and State income taxes and if used for eligible education costs, they are not taxed upon withdrawal.
- Custodial Accounts. If you wish to make gifts to grandchildren that might not be used for education, a custodial account might be an option. Custodial accounts are investment accounts managed by the adult custodian for the minor’s benefit. Once the grandchild becomes an adult, they are able to gain control of the account and use it. If your goal is management beyond your grandchild attaining the age of 18, this option may not be the best option.
- If you wish to make gifts to a grandchild and to control the funds for a period beyond the grandchild reaching age 18, establishing a trust for the grandchild’s benefit may be the best option. Trusts can be established with distribution rules that meet your specific goals. Perhaps your goal is that the funds are available to assist the grandchild in purchasing a home, or that the funds are distributed over time to help the grandchild get a start in life. In either instance, your trust can include the specific distribution rules you select.
If you are interested in working with an attorney to create a trust for your grandchild, call Grissom Law, LLC today at 678.781.9230 to schedule a time to meet and discuss your needs.
Disclaimer
This Blog/Web Site is made available for educational purposes only as well as to give you general information and a general understanding of the law, not to provide legal advice. By using this blog site you understand that there is no attorney-client relationship between you and Grissom Law, LLC.