How can I ensure my grandchild is cared for in the event of my death?
In the past 30 years, the number of children being raised by their grandparents has doubled. United States Census reports indicate that about 6.5 million children under the age of 18 are currently living in a home that includes at least one grandparent. There are numerous reasons why a grandparent may end up raising a grandchild, including the death or incarceration of a parent. No matter the reason, any grandparent who provides care for their grandchild should take steps to ensure their loved one is protected after their death. By engaging in some basic estate planning, Michigan grandparents can rest assured that their grandchild will be financially secure with a guardian of their choice in the event of their death.
Make a Will
One of the most basic and important estate planning tools you can create is a will. Any grandparent with informal or formal custody over their grandchild should have a will. In the will, you can provide that your assets go to your grandchild. Even further, grandparents with custody of their grandchild can select a person to care for their minor grandchild if both caregivers pass away. Without this critical document in place, the court will be forced to name a guardian, and it may not be someone you would have chosen.
Create a Trust
Trusts offer a powerful and flexible way to pass down your assets to your grandchild. With a trust, you can not only determine who will receive your assets but also when and under what circumstances. For instance, you could require that the funds within the trust be used for educational purposes only, or you could spread out the distribution of funds through your grandchild's lifetime. Trusts can offer tremendous tax savings and may allow your grandchild to forego the lengthy and costly probate process.
Take Advantage of Tax Savings Accounts
Several options exist for placing funds within tax savings accounts. These include a 529 plan and Uniform Gifts to Minors Act (UGMA) account. You can reduce your taxable income while providing funds for your grandchild's educational expenses by using these accounts. Your estate planning lawyer will closely review all of your options to create a comprehensive estate plan that will best provide for your grandchild.