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Grandparent News
Consider Putting Gifts to Grandchildren in a Trust
Give up to $12,000 a year that doesnt have to be
reported
By
ElderLawAnswers.com
 June 1, 2007 - Gifting assets to your grandchildren
isn't just a nice thing to do; it can reduce the size of your estate and
the tax that will be due upon your death. Grandparents can give their
grandchildren up to $12,000 a year (in 2007) without having to report
the gifts. While you can make an outright gift, pay health care and
school costs directly, or put the money in a custodial account, putting
the money into a trust has some major advantages.
With the help of an attorney, you can draft a trust
that reflects your express wishes about when the income and principal
will be available to the grandchild, and even how the funds will be
spent. Transferring funds into such a trust offers the following
benefits:
● You can reduce the size of your estate by
transferring up to $12,000 (in 2007) into each trust you create for each
grandchild. No gift taxes will be due in connection with the transfers.
● Although the trust owns the assets, you control
them as trustee and can decide what type of investments to make.
● Income earned by the trust from amounts that
you've deposited will not be taxed to you; the trust pays the taxes.
● Amounts deposited in trust, and the income
earned from those funds, will be used for the benefit of your
grandchildren.
● You can provide that the trust terminate at any
age you specify.
In order to qualify for these benefits, however,
certain restrictions apply. These trusts are complex legal documents and
should not be set up without the help of an experienced attorney. As a
result, the chief downside of such trusts is the cost of establishing
and maintaining them, which you should discuss with an attorney before
going ahead with a trust.
As a final note on establishing such trusts, you
must be totally comfortable with this gift planning strategy and the
amount of money available to you in your estate. In short, you should
only make gifts if you feel certain that the amount of funds remaining
in your name and the amount of income they will produce will be adequate
for your needs.
For more on gifts to grandchildren,
click here.
For updates to this report at ElderLawAnswers.com
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To find a qualified elder law attorney through
ElderLawAnswers.com to help you set up such a trust,
click here.
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