Should You Use a Gift Account for Minors?

Expanding your family through the birth of grandchildren is an exciting prospect. It also prompts plenty of grandparents to think about how they could effectively help their grandchildren save.

This is a common goal for many parents as well as grandparents who want to leave behind a legacy and a gift for minor children to help them with education or other goals in their life.

There are many different options available to you to pass on financial gifts to your grandchildren, but some of the most popular are Roth IRAs, 529 college savings plans and uniform transfer gift to minors gifts. UTMA accounts allow for an irrevocable gift to the minor.

These are established with a custodian who is usually the parent of the child. That becomes vested when their fiduciary responsibility for that minor’s account. The major benefit of going with UTMA to gift to your grandchildren is the simplicity.

A trust does not have to be drafted but you will have less control over how those funds are handed over. Each state has rules about when the minor is officially considered an adult and when they receive those amounts.

529 college savings plans, on the other hand, have tax benefits for both the recipient and the giver. Scheduling a consultation with a Virginia Beach, VA estate planning lawyer can help you to identify if these or other options are most appropriate for the accomplishment of your estate planning goals.

 

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