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Secured gifts of money (that his parents won't spend) for our 3-year-old Grandson
Anonymous8 views5 answers
My husband and I would like to give our 3-year-old grandson gifts of money on his birthday and major holidays, only his parents (who have estranged themselves and him from us) will end up spending it on their own needs. What is the best way to set up something so that our grandson gets the money when he turns 18? We have sent him toys, clothes, etc., only to hear that his parents end up throwing the items away, so we thought it would be better to either buy him savings bonds or set up some sort of trust in his name (and so that his parents can't touch it). We don't have a lot of money to invest, but can afford $50 a few times a year. Thank you for the help.
There are many options you could pursue to do this. First, you could set up a trust and make your grandson the beneficiary when he turns 18 or older so that his parents won't have control of the money. You could also set up a what is known as a custodial account with a bank or brokerage firm where your grandson's name would be on the account but you would be the custodian's of the account and he would not have access to the funds until he was 18 years old. You could also purchase bonds or CD's in his name and hold them as custodial accounts as well.
You can discuss your options with a banker or an attorney depending on which route you want to go. If you have any questions or need further assistance please feel free to contact our office.
Douglas R HolbrookLawsuit / Dispute AttorneyNewport, OR ·
The problem is a 3 year old can't really own property or control it.
I would suggest, given the amounts involved, that you consider a savings account to aggregate the money over time. If your state sells bonds for higher education (see for example https://www.oregoncollegesavings.com/index.html ) you may find that an attractive option. What is nice is that your are thinking about this at such an early age, so the money can grow.
If you wanted more flexibility than college bonds, since the grandchild might not go to college ultimately, once you have a good amount of money aggregated, you could consider a trust that would flexibly allow education costs to be paid or a down payment on a home, etc.. I don't think a trust is cost-effective with the amounts you are proposing.
As important here, is that you and your husband see that you have a property estate plan. If you want to channel the assets to support the grandchild, you can set up a testamentary trust (one that is formed after your death, set up in your will) easily, and effectively.
You will need to see an estate planning lawyer to prepare such a document. Do not try to use internet forms or software, unless you also have a lawyer review whatever you come up with. I have seen many problems with internet-provided wills and other legal documents, which cost a lot more money to fix than it would have been to have a local lawyer prepare them correctly.
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Given the limited amounts you have to contribute from time to time, the cost and effort of setting up a trust probably is not worthwhile as an alternative to a custodial trust unless you intend your grandson to be your sole beneficiary at the death of the survivor of you and your husband. A custodial account can be established through a bank or credit union.
