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Should You Leave an Inheritance for Your Grandchildren?

Dec 14, 2020 | Estate Planning

FAST FACTS

  • You should leave an inheritance to your grandchildren if possible.
  • You can give a nominal amount of money to each person, or an equal percentage to each person.
  • Be mindful that giving an equal percentage to each person may leave one root of the family with more of an inheritance than the other depending on how many people are on that side of the family.

Today’s video is going to be answering the questions, “should you leave an inheritance for your grandchildren? Should you leave an amount of money to your grandchildren straight away rather than simply just to your kids?”

On the one hand, I am 100% for leaving an inheritance for your grandchildren, with a few little caveats or concerns. Let’s talk about why I am in favor of it. One reason I’m in favor of it is because it sends a message from grandma and grandpa to the grandkids that you care about them, that you love them, and that you are thinking about them.

I think that’s pretty darn important when they spend that money ‑‑ hopefully they’re not going to blow it ‑‑ that they think of you and so on one hand, I am very much in favor of it.

Ways to Leave an Inheritance to Your Grandchildren

Let’s talk about the ways to do that, and the ways I’m in favor of and the ways I’m not really in favor of it. If you leave a nominal amount, nominal meaning 500, 1,000, 5,000, 10,000 dollars to each grandchild, great. No problem. It does depend on how large your state is. Let’s assume you do that. That means there’s still going to be good bit of money, maybe the house, the proceeds, whatever bank account has, to go to the kids. That’s no problem.

But you potentially need to think this through a little more ‑‑ again, you can do whatever you want to I’m just helping you think this through ‑‑ if you were to say something like the following. Let’s imagine you want to give 10% of everything to each of your grandchildren. This sounds like a good idea. I’m going to use a very obvious example of this, to make my point.

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You have two children. One child has four children, the other child has zero children, and you’re going to leave 10% to each grandchild, and split the rest among the children. That means these four grandchildren, each gets 10%, that’s 40%; that leaves 60%.

60% divided by the two children is 30% to each child. One root, if you will, that one child had four children, they got 40% plus 30% for the child. That 70% went to that one root of your family. 70% versus 30%, because the one that didn’t have any children only got the child share, not a grandchild share.

Nominal Inheritance Amounts vs. Percentage Inheritance Amounts

You can have two attitudes about that. One of two, you can either say, “Jeff, I really don’t care. That’s fine. I want to treat each grandchild equally.” Great. The problem though is you just heavily rewarded, potentially the child that ‑‑ please forgive me for saying it this way ‑‑ that went out and got their spouse pregnant or got pregnant themselves.

I call that a procreation bonus. But you penalized the child that either wasn’t able to have a child, didn’t get married, or whatever reason, you penalized that child. We can talk about how to do that a little bit differently later, but right now, I just want to tell you unequivocally that I am in favor of leaving assets, leaving something to the grandchildren.

I would prefer to leave it something, a little bit more nominal, so that it doesn’t skew the percentages to one sibling or one child to the other, too steeply. At Fouts Law Group, we focus entirely on protecting assets and estate planning so that the money stays with you and your kids. We are not general practitioners at all. We want to make darn sure that your money stays with you, doesn’t go to the government, doesn’t go to your next spouse, doesn’t go to your son‑in‑law, etc.

We at Fouts Law Group focus on asset protection for you and for your family. We specialize in that. We are not general practitioners. We want to share our knowledge with you. We want you to have a plan that actually functions and doesn’t just look pretty.

Give us a call if you’d like to schedule a free consultation. When you come in, I’ll also give you a copy of my book. It is a real book available on Amazon, but you won’t have to pay for it. It’s called “Estate Planning in Georgia,” how to leave your assets in a smart way and protect it.

Want to learn more about protecting your assets and life savings? Attend our free online workshop today!
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