Leaving Money to Your Grandchildren? Start With Your Goals.

Jenna Riley

For many grandparents, one of the most rewarding parts of financial planning is knowing they may be able to help the next generation.

Whether you want to help pay for college, purchase a first home, start a business, or simply give your grandchildren a financial head start, leaving an inheritance can be a meaningful part of your legacy.

But before deciding how much to leave—or which account or strategy to use—it is worth taking a step back and asking a more important question:

What do you want the money to accomplish?

The answer can help shape the rest of your estate and financial plan.

Start With the "Why"

When grandparents tell us they want to leave money to their grandchildren, the first thing we want to understand is the reason behind the gift.

Perhaps you want to give your grandchildren opportunities that you didn't have. Maybe education is important to you. Or perhaps your goal is to establish a foundation of financial security that can benefit your family for generations.

Consider asking yourself:

What would I most like this money to accomplish?
Is there a specific milestone or opportunity I want to help fund?
Do I want the money used for education, housing, starting a business, or something else?
Would I prefer the money to provide immediate assistance or become long-term family wealth?

There isn't one right answer. Your strategy should reflect your family's goals and your intentions.

When Should Your Grandchildren Receive the Money?

The timing of an inheritance can be just as important as the amount.

For example, you may want to help a grandchild with college expenses in their late teens or early twenties. Alternatively, you may believe the money will have a greater impact later in life when they are purchasing a home, raising a family, or approaching retirement.

Ask yourself:

At what age should my grandchild have access to the money?
Should they receive it all at once or in stages?
Would I rather provide financial assistance earlier in life or preserve the money for later?
Do I want the money to remain invested for their future?

Thinking through these questions can help determine how much flexibility and control you want your estate plan to provide.

How Much Financial Responsibility Should They Have?

A common concern among grandparents is wanting to help their grandchildren without unintentionally giving them more money than they are prepared to manage.

Would you be comfortable giving a large inheritance to a grandchild at age 18, 21, or 25?

Or would you prefer the money to be distributed gradually or according to certain guidelines?

Consider:

Would I be comfortable giving the money to them outright?
Do I want any guidelines around how the money can be used?
Would I prefer someone else to help manage the assets until they reach a certain age?
Do I want the inheritance to encourage education, homeownership, entrepreneurship, or other goals?

These decisions can have a significant impact on how an inheritance ultimately benefits your grandchildren.

Should Every Grandchild Receive the Same Amount?

Equal doesn't always mean equitable.

Your grandchildren may be at very different stages of life and have very different financial circumstances. One may be attending college while another is already financially independent. Another may have special financial needs or a different level of family support.

Consider:

Do I want each grandchild to receive exactly the same amount, or do I want my plan to account for their individual circumstances?

There is no universal answer. The important thing is to make your intentions clear and coordinate them with your overall estate plan.

How Do You Want the Inheritance Protected?

Another consideration is whether you want the money protected after you are gone.

Depending on your circumstances and goals, you may want to consider how an inheritance could be affected by future financial decisions, creditors, lawsuits, divorce, or other circumstances.

Ask yourself:

Do I want the money protected rather than given outright?
How much control do I want the inheritance structure to provide?
Would I want the assets preserved for future generations?

The goal isn't necessarily to control how your grandchildren live their lives. It may simply be to make sure the gift you've worked hard to provide has the greatest possible long-term impact.

What Do You Want Your Money to Say About You?

An inheritance is about more than dollars and cents.

It can be a way to communicate your values.

Maybe education has always been important to your family. Maybe you want your grandchildren to have the opportunity to start a business. Maybe you want to help them purchase their first home. Or perhaps your ultimate goal is to create wealth that can continue to benefit your family for generations.

Ask yourself:

What do I want my grandchildren to understand about why I am leaving them this money?

That answer can be incredibly valuable when developing your estate plan.

Start With One Simple Question

If you could accomplish only one thing by leaving money to your grandchildren, what would it be?

That answer may be more important than the dollar amount itself.

Once you understand the goal, you can begin evaluating the strategies that may best support it. Depending on your circumstances, those strategies could include trusts, 529 plans, beneficiary designations, life insurance, investment accounts, or other estate-planning tools.

The strategy should come after the goal—not before it.

Your Legacy. Your Goals. Your Plan.

At Riley Planning & Investments, we believe comprehensive financial planning is about more than managing investments. It's about helping you make thoughtful decisions about what your money is intended to accomplish—both during your lifetime and for the people you care about most.

If leaving money to your grandchildren is part of your plan, we can help you think through the "why," "when," and "how" before you decide on a strategy.

Your legacy is personal. Your financial plan should be, too.

Riley Planning & Investments Helping families plan for today, tomorrow, and the generations that follow.