Grandparents who want to provide for their grandchildren have a number of options when they are engaged in the process of estate planning. First off we would like to look at the matter of education.
Few things are more valuable than a good education, and college tuition is extremely expensive these days. Providing a free education to your grandchildren would certainly be a fine way to extend a hand.
The fact is that there can be tax advantages that go along with paying college tuition for your grandchildren. The estate tax exclusion is going to be just $1 million next year, so a lot of grandparents are going to be faced with the prospect of their heirs paying this tax.
Utilizing your available exemptions to give tax-free gifts to your loved ones can be a good way to reduce the taxable value of your estate.
You are allowed to pay the college tuition of students as a gift free of the gift tax. If you were to pay college tuition for each of your grandchildren you would be significantly reducing the value of your estate so your tax liability would be reduced.
If you have minor grandchildren that you would like to set aside resources for you could convey assets into custodial accounts under the Uniform Gifts to Minors Act. Alternately you could fund a trust incrementally giving gifts on an annual basis that are within the $13,000 per person annual gift tax exclusion.
To learn more about how you may be able to provide for your grandchildren in a tax efficient manner simply take a moment to arrange for a consultation with a licensed, experienced Indianapolis estate planning attorney.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.