How common is it to include grandchildren in one’s will, when primary children are still living? If they are ever included, what is considered a reasonable way to divide an estate? (obviously everyone is going to have a different opinion here, hence the placing in IMHO. Any real experience with the issue is appreciated)
Why no, my grandparents aren’t getting older, why do you ask?
Oh, I should specify that I meant adult grandchildren, if it makes a difference.
Depends on how much money there is in the estate. If you give too much to the children and the IRS will just end up with it anyway, it is a good idea to spread it about and keep it in the family.
My old man left enough to his grandkids that if they have half a brain, will never have to work a day in there lives.
My wife’s Grandmother divided her estate among her Son (my FIL) and her 7 grandkids. MY wife’s Aunt passed away long ago. I am not sure of the exact split, every grandkid got an equal amount and I believe my FIL got double that amount, but I am not positive.
Hopefully that helps a little,
Jim
Round here, there is a really insane amount of stupid-tax on inheritance of property which is not a “home”, i.e. cabins, random bits of land etc. Most of this can be skipped entirely by leaving them to your grandchildren instead of your children. Which is why there are a lot of young people and children with obscene (on paper) fortunes to their name…
(stupid-tax is what I call any tax designed to bleed rich people, buy winds up only hitting people who own too much to be poor, but too little to afford half a million kr. in taxes. Note to norwegian politicians: rich people can afford clever lawyers.)
Not sure if this has any relevance to you, but its one possible explanation.
A person can do whatever they want to do with their money. If all three of us kids die before my dad does, my son and my neice get all the money. It’s in writing.
In my family the grandchildren arn’t included in the wills. The money is divided amongst the sons and daughters. It’s then up to them if they want to share any of it with there own children.
When my Grandad died (my Grandparents are divorced), my parents gave my brother and I £500 each in cash. And they also used the money to help pay me through university.
My Grandma (who was married to previously mentioned Grandad, and Grandad 2 also passed away) likes to change her will on a regular basis. Cutting out whoever annoyed her the most that week. (Always one of her step-sons.) In the end I guess the money will be divided amongt her two daughters and three step-sons. After all, the money is as much Grandad’s as it is hers. So his sons should get a share too.
You CAN do whatever you want.
A typical technique is to divide equally among the immediate children, with the proviso that if one of them dies before the person whose will we’re talking about dies, then that child’s share will flow to his/her children to be divided equally among them=the will-maker’s grandkids. That way one or another of the immediate children cannot increase their family’s share of the estate by creating lots of grandkids.
Somebody mentioned taxes. How the estate is divided has little if any effect on US taxes; there’s not some rule that inheritances over $X get taxed differrently. The total estate size DOES affect estate taxation, but not its division.
Now Distribution, ie how the money is paid, can also affect taxation, mostly in the case where the much of the value of the estate is tied up in an asset lump that must be sold entire to generate cash to distribute.
If dear departed Granddad has $500K in stocks, that can easily be divided 2 or 4 or 7 ways without selling anything. Butif he has a $500K house & lot and $3 in petty cash to his name, there’s no good way to divvy the 500K without selling the house, which may trigger all sorts of tax isues that transferring the stock never would.
Ditto, plus, if the estate is mostly an interest in a business. Whole or partial ownership of a partnership or non-traded corporation can be very tricky to value and subdivide. Farms too.
Finally, some folks try to give money away before they die either trying to avoid probate delays, or in the (ususally mistaken) beelif that doing so somehow has tax advatages. Above certain limits this can trigger US Gift tax or Generation Skipping Tax, defeating the grftor’s purpose. If there’s much money involved, a detailed review by a tax guru (not me) would be well advised before somebody does something dumb.
FWIW, my siblings and I inherited from my great-aunt’s estate. She had no children and outlived two (rather well-to-do) husbands.
My dad inherited a chunk, a couple of charities got another, and the great-nieces and nephews got a nice piece of change. The family took a trip to Hawaii to see my nephew play football, and yesterday we gave the last installment to our broker to invest.
So it happens. I expect it will also happen with my kids (and nieces and nephews) when my parents die.
Regards,
Shodan
I only have one set of grandparents, my mom’s parents, and they have five children. Of their five children, one has two kids (and five grandkids); one has four kids (and two grandkids); one has two kids; and two are childless. Of the two childless ones, one is in a rest home, and will be for the rest of his life.
My grandparents have divided the estate equally among their children, with nothing to the grands or great-grands. We all kind of have problems with this, but the grandparents can do what they want.
My mom and her sister don’t want anything out of the estate; they’re both pretty well set for life, and so they’d rather the money go to their brothers, who are in situations or stages of life where that money could make an enormous difference. But the grandparents don’t want to “cut them out of the will,” for emotional reasons. So my mom and her sister plan to quitclaim when their parents die, so that their share will go back into the estate. (Yes, all of us kids also will quitclaim.)
My other problem with the way my grandparents have set up their will is that my uncle, who is in a home, still gets a share. But because he is currently supported by the state, the state will take his share to pay for his medical needs. If my grandparents instead would put his share into a special needs trust, the state couldn’t touch it, and he could use that money to buy things that the state won’t: crossword puzzles, sweaters, slippers, etc. But for whatever reason, they don’t want to do that.
But it’s their money. They can do whatever they want with it.
My only other grandparent was my dad’s grandmother, who died when I was a teenager. She left everything to my dad. Only one of her three children still was alive at that time, and she had a bunch of other grandkids besides my dad, but because her estate was relatively small, she just left everything to my dad, to whom she was closest.
To answer the OP, though, as many different kinds of families there are, you could divide the estate a zillion different ways. My maternal grandparents are giving their estate equally to their children; my paternal great-grandmother ignored her children and left her estate to one of her grandkids.
That’s actually pretty common out here. Especially in my family, where the people are complete nutjobs who are always pissing each other off.
I don’t like that family, and I don’t want anything from them, but I’m the first grandkid and the first great-grandkid, and no matter what I try to do to get these people to leave me alone, I can do no wrong. I suspect that I’m going to be getting money when some of them croak off, and I think I’m going to use it to buy my parents a house or something.
~Tasha
Common here, at least, is to put money in trust for the grandkids while you’re still around. (These are minor grandchildren.) My dad is putting it away in trusts for my half-brother’s kids with me as trustee, and then the real will has it divided between him and me. I don’t know in what percentage, but as he’s adopted I think it’s required that he get something - you can’t disown an adopted child. Pity, that.
My grandmother has been floating the idea of skipping her children entirely in her will. My parents and my aunts and uncles are all pretty well off, so she thinks this is just a good way to avoid estate tax getting paid twice on the same money (once from her to my parents, once from my parents to me). Good plan, although awfully morbid.
I don’t know what will happen to my grandmother’s estate–though I suspect the largest sum will go to (a specific) charity. But she has started giving chunks of money to her children and grandchildren (very evenly divided. 'Course it helps that all three sons are married, each son had two kids, all are healthy and happy, and so far only one is married (and only one other is over 30, so it isn’t like this is the way it will always be). Aside from the theoretical tax benefits, she has started giving out money with the idea that the children and grandchildren can start enjoying the benefits of it now. Driving nicer cars, downpayments on houses, foreign travel, etc.
Gift tax only kicks above $10,000 or so, per recipient per year. If you’ve got a lot of kids and grandkids and a lot of years left, you can avoid a good chunk of estate taxes by distributing cash gifts to the youngins every year.