Money for grandkids

Money for grandkids

I would like to set up an account for each of my grandkids. What would be the best way to do this so I can have some control of assets, but have them in their name and Social Security Number? Is there a way to also keep them separate from being claimed as part of their total assets in the future for financial aide, scholarships, etc?


There are a lot of ways you can do this. Here's a few:

  • Trust for each grandchild. This can be structured to avoid gift and estate tax and qualify for the annual gift and GST tax exclusion. You can name a trustee to manage the trust so through the trustee you will have control rather than having the grandchild control the assets. This would not be under the grandchild's social security number but rather under the trust tax ID numbre.
  • 529 College Savings Plan. You could remain the account owner and have control and the assets would be out of your estate, free of income tax, and be available to meet qualifying college costs. However, the funds could not be used for anything, only qualifying college costs. Its not clear if this meets your definition of control.
  • Family limited partnership or family limited liability company. This could have a FLP or LLC interest owned by your grandchildren, leverage gifts for gift tax purposes, and leave you with some significant control. However, if you retain too much control the assets would be pulled back into your estate for federal income tax purposes.

You really need to meet with an estate planning specialist in your state. If a specialist had all your key financial and personal information and could discuss your goals the best option or two would probably be pretty obvious, which would be a lot easier for you then exploring the myriad of different possibilities in a theoretical way.

Good luck.

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