There are many ways that grandparents can transfer some of their wealth to the grandkids, but it is important to plan out what approach to take and which resources to use. Grandparents in Texas can take advantage of plenty of tools to help lower their tax burden as well as benefit their descendants.
What are the resources grandparents can use?
There are several things that grandparents should know about when it comes to estate planning. The 529 plan is one of the most important: It’s a tax-advantaged way to help fund a child’s education. There are other education options too, but beyond that, there are even more options for leaving assets to family members. There are several different types of trust you can create for them with their own respective rules for taxation, access, control, and flexibility. Trusts can be used for adult children as well as minor grandchildren.
It’s very important to make sure that the beneficiaries of all of your assets, trusts, will, and other items are up to date and accurate. In some cases, depending on how you handle the assets, the implications for taxes and required minimum distributions of retirement accounts can be major. That is why taking advantage of each tool and resource can make things much easier for your children and grandchildren to access.
Making sure grandchildren are taken care of
It often surprises grandparents how much estate planning can change the value and complexity of their inheritance. The more significant the estate will be, the more essential it is to do the proper planning and tap into the various avenues to transfer wealth safely. Smart estate planning minimizes the tax impact for everyone involved, especially for the beneficiaries who would be responsible for clearing up any outstanding issues.