Grandparents often want to give some financial assistance to their grandchildren and great-grandchildren. There can be a number of good reasons for making specific provision for grandchildren in your will or through a family trust. The traditional will-drafting practice is for parents to provide for each other and then when both of them have died, they provide for their children, on the assumption that their children will then in turn acquire assets and provide for grandchildren and great-grandchildren.
First, there is often, in practice, no such provision for grandchildren and great-grandchildren by will-makers. In many cases, the will-maker’s children receive their inheritance and either spend it or provide for their partners or spouses. Little, or sometimes nothing, trickles down to grandchildren and great-grandchildren.
Secondly, it is now common for people who die in their 80s and 90s to have adult grandchildren who can make very good use of an inheritance to buy a property, establish a business or clear a student debt.
Thirdly, specific provision for grandchildren often comes as a very pleasant surprise for a grandchild. It can create a real bond and sense of belonging between grandparent and grandchild.
If you are a grandparent and would like to provide for your grandchildren by will, or through a trust, the following points should be taken into account.
Should the gift be a specific monetary amount? If so, how much? Alternatively, a share or percentage of the residue of your estate can be left to your grandchildren. Changing circumstances and changes in the value of money can make important differences.
Maybe establish a trust?
It is possible to establish a trust fund for grandchildren through your will. Instead of giving grandchildren a lump sum, the funds are set aside for their benefit when you die. This should ensure that the funds remain safe from a grandchild’s creditors or partners if a relationship breaks down or a business fails.
Good for trustees to have flexibility
It is best to give the trustees of your will sufficient flexibility to authorise the early release to grandchildren of part of the funds for specific purposes such as the costs of surgery, a wedding, purchase of a property, travel and so on.
Letter of wishes as another option?
Another option to consider is a letter of wishes, or memorandum of wishes, to be held with your will. In this document you can set out your wishes in relation to the gift to your grandchild and give indications as to how you may wish to see the funds be used. These letters or memoranda can be changed from time to time. Similarly, gifts of a chattel, or a personal item such as jewellery, can be covered in this letter or memorandum of wishes.
People are living longer than ever and it is common when a person dies for their children to be in their 50s or 60s and well-established financially. Your grandchildren, however, are perhaps in their 20s or 30s and are likely to be at the point when they are most in need of financial assistance. In these circumstances, there are a number of positive benefits for both yourself and your grandchildren for specific provision to be made for them. If done well, the message from this will stay with your grandchild for the rest of his or her life.
It is always wise to take advice when preparing wills. If you’re contemplating making provisions for your grandchildren, there are a number of specific considerations to be taken into account. They include the changing circumstances and needs of your grandchild, at what age the gift should have effect, how much this will impact on gifts to other family members and who is to act as trustee to hold and invest the funds pending distribution.
If you’re thinking of including your grandchildren in your will, please be in touch so we can talk about how best to do this.