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When it comes to grandchildren, most grandparents seek to shower them with gifts. There is a great deal of truth in the common jokes about how spoiled grandkids can be. Often, this practice does not stop when the grandkids have grown up, and grandparents will help them out with school tuition payments, their first car, wedding fees, and even more. Even more than the love that is shown during their life as they bestow gifts on their grandkids is the desire to be remembered. This is why grandparents often leave large gifts behind for their grandchildren to enjoy long after they are gone. Although helping your grandchildren is considered to be a good idea, there are always legal issues which should be addressed beforehand. If you are considering giving a large gift to your grandkids or other loved ones, Elder Law Attorney Patricia Bloom-McDonald can guide you through the legalities. Here are a few things to consider when giving or leaving gifts for your grandchildren.
Will Taxes be an Issue?
The gift tax exemption in the Commonwealth of Massachusetts, as well as other states, was ten thousand dollars. It has recently been raised to fourteen thousand dollars to cover cost of living expenses. This means that anyone who receives a gift or gifts from someone which total to over fourteen thousand dollars in one year, they must report that amount on a gift tax return. Although many people may be required to report this gift tax, not many will ever have to pay anything. That is because the total of gifts in any one year must exceed $5.34 million before the recipient is required to pay anything. Another thing to take into account is that there is no limit to how much someone can pay to their loved one’s college or their cost of health care as long as they make the payments directly to the school or to their doctor, hospital, etc. For those who wish to leave behind a great deal to their grandchildren, but do not want to leave them with a heavy tax burden, setting up a trust is a good idea.
Are You Being Fair?
In many families, grandparents may be closer to some grandkids than others. This could be for a number of reasons. In some cases, it is simply a matter of location, since it is easier to become close to those who live closer. In other cases, there may have been a family dispute which caused the grandparents not to be able to see their grandchildren as often as they wish. Either way, it is quite normal to be more familiar with some grandkids and not with others. Of course, these types of feelings may cause you to decide to leave more to the grandkids which you are closer to than to others. While this may seem fair to you, there are a number of issues which could result from those types of decisions.
1. Family issues could arise because other grandchildren and their parents feel that you are showing favoritism.
2. Parents of the grandchildren which are being favored may feel that you are trying to interfere in their relationship with them and their methods of teaching kids responsibility.
3. The grandchildren that you favor may become too dependent on your help.
4. Leaving behind more for some grandchildren than others could cause family members to contest your will and fight against your last wishes in court.
While it is your money, and your choices to do with it as you like, it is always a good idea make your wishes clearly known and understood before it can go to court. In order to avoid probate court in such matters, it is a good idea to leave any inheritance behind in the form of a trust. If you have any questions about the best way to give gifts or leave an inheritance to your grandchildren, give Elder Law Attorney Patricia Bloom-McDonald a call today.