Expert Q&A

Is there a more tax friendly way of passing $25,000 on to my grandchildren besides just outlining it in my will?


Related Topics: Taxes, Estate, Wills and Trusts
Related Tags: Estate Planning, Wills, Tax Planning, Taxes
Tony DePasquale
2 of 2 people found this helpful
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By Tony DePasquale - Elysien Private Wealth & Real Property
Answered about 2 years ago

Another idea is funding a 529 college savings plan with the assets. This will get the money out of your estate and the money can grow tax deferred until it is used by your grand children. This obviously depends on if college funding is a priority, but it is a popular estate planning concept.

Thomas Cunningham
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By Thomas Cunningham - Self Employed
Answered about 2 years ago

For non-qualified funds advisors have been using a strategy that utilizes an annuity and permanent life insurance. This strategy has been around for many years and if health conditions permit it is most likely the best leverage and tax advantage. Most life insurance agents will not be knowledgeable enough to handle this unless they have been in the business for a long time or specialize in estate planning.

It would be recommended to consult your attorney and tax advisor before using such a strategy.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />


If you are in MD,PA, or CA feel free to contact me.

William T. Cummins, MBA, CFP
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By William T. Cummins, MBA, CFP - Retirement Counseling Services
Answered over 2 years ago

In the absence of background information about your unique situation, there may be two other ideas that could be helpful. First, if the subject $25,000 account is non-qualified, depending on your state, you may be able to change the account registration to a Transfer on Death (TOD) account. The assets would be passed on outside of your will… (I’M NOT AN ATTORNEY). If the subject assets are in an IRA or other qualified plan, changing beneficiaries (With Spouse Approval) could work. Finally, a single deposit life policy my be appropriate in that it would pass tax-free and may even leverage up the amount to be passed on…

George Sleeman
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By George Sleeman - Tax Man To You, LLC
Answered over 2 years ago

You are saying Grandchildren, so I am assuming you mean more than one, and yes there is another way.

You can give each person a gift of up to $13,000 per year and not have to pay the gift tax. Now remember, the gift tax is paid by the gift-er (you). Unless you have an estate valued over 5 million, the feds do not tax the estate. Each state has different rules, so check with the state to see what the taxes are.

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