Can I Leave Money Directly to My Grandchildren?

Can I Leave Money Directly to My Grandchildren?- A grandfather wants to give a large inheritance directly to his grandchildren after his son blew through a $300,000 inheritance from his late wife in only a few years. He hasn’t told his son yet and is seeking more information about how to do this, as described in a recent article from Yahoo! Finance, “Man, 72, Wants To Leave $2 Million To His Grandkids Instead Of His Son—Says His Son ‘Blew Through’ His Inheritance Already.”

His goal can be accomplished. However, it has to be done with the guidance of an experienced estate planning attorney if the plan is to be successful.

When you leave assets to a grandchild and not a child, it’s called a “generation skipping transfer,” which has special tax rules. The IRS applies a Generation Skipping Transfer Tax in addition to gift and estate taxes when heirs are more than one generation below the donor. Most people are well below the federal exemption thresholds triggering the tax. However, state tax laws may come into play.

A simple will is not the best way to accomplish generation skipping, especially if the grandchildren are minors or if they are young adults and aren’t ready to manage large sums or valuable property.

The best solution may be a trust to control how and when assets are distributed. A trust could be created to release funds for educational bills only, or in controlled amounts for life milestones, like reaching a certain age or making a down payment on a home.

Can I Leave Money Directly to My Grandchildren?

An estate planning attorney can structure this trust and coordinate which assets should be placed in the trust, which may include retirement accounts, investments, or real estate. The plan needs to take into consideration the different taxes for assets if they are taxed differently upon the grantor’s death.

Whichever way the father decides to structure this, leaving it to be revealed upon his death may cause more damage than telling his son his intentions now. An estate planning attorney may advise having this conversation in an office setting, perhaps with a neutral third party or a social worker to avoid emotions getting out of hand.

Another reason to discuss this while the father is still living: if the son decides to contest the will, the fact that the trust and will were created with clear documentation while the father is of sound mind will be more difficult to challenge than one drafted later in the father’s life.

If the father’s assets include 401(k)s or IRAs, their beneficiary designations need to be updated. If he wants the accounts to go to the grandchildren and the grandchildren are minors, their parents may end up controlling the assets anyway. Planning is critical.

The trustee will need to be picked with care; it may make more sense to have a professional trustee manage the trust rather than a family member, to eliminate family members fighting with each other over access to the assets.

An estate planning attorney will be needed to ensure the overall goals: protect the grandfather’s wishes and keep the family from fighting over his wishes.

Schedule your phone consultation: THE LAW OFFICES OF CLAUDE S. SMITH, III

Can I Leave Money Directly to My Grandchildren?

Reference: Yahoo! Finance (July 12, 2026) “Man, 72, Wants To Leave $2 Million To His Grandkids Instead Of His Son—Says His Son ‘Blew Through’ His Inheritance Already”