Recent WSJ thoughts on direct gifting to grandchildren

In a recent WSJ planning article, the following question was posed:

Questions:  You recently wrote about estate planning and leaving a “legacy.” I have a more specific question: Should I include my grandchildren in my inheritance plan?

Answer:  Most people seem to leave everything to their adult children, but I know some couples who are naming both children and grandchildren as beneficiaries. A difficult question, with no single, correct answer. Thanks to longevity gains, many grandparents these days are more involved in their grandchildren’s lives, simply because they have more years to spend with them. There is one possible downside to being a generous grandparent: Your children may view bequests to your grandchildren—particularly if the latter can spend the money before they finish college—as usurping their parental authority. What’s more, grandchildren receiving a hefty inheritance at an early age could wind up rudderless. Or as one financial adviser told us: “When your goal in life is to not screw up what you have, as opposed to seeing what you can build and create yourself, it doesn’t promote high self-esteem.” In short, to keep your benevolence from backfiring, tell your children what their children could be getting as an inheritance, and ask how your children feel about it. One possible strategy is to pass money to a grandchild through a trust fund for which the child’s parent is one of the trustees. If You Want Your Grandchildren to Inherit Some of Your Money There are ways to do it, but it can get complicated.  And again, it’s critically important to put some thought into the age at which your grandchildren would get control of the money. You may want to wait to hand over any funds at least until they are in their early 20s, or parse it out gradually, letting them use part of it to pay, say, college bills. I trust you have a good relationship with your grandchildren, as do many grandparents. But having Jack and Jill inherit a pile of money before their professional lives have even begun likely wouldn’t help anyone. A final note: Transferring personal belongings to heirs—a favorite baseball glove, a treasured photo, a collection of vinyl records—often can be more challenging, given the sentimental value, than doling out financial assets. So, before you give the pocket watch that’s been in your family for three generations to your grandchild, spend some time with a resource we have highlighted previously: “Who Gets Grandma’s Yellow Pie Plate?” This invaluable program, developed by educators at the University of Minnesota, can help families pass along personal possessions with, ideally, little conflict.