As the economy changes and housing costs rise, an increasing number of grandparents are offering financial assistance to their grandchildren. This shift in priorities can impact estate planning and estate administration, especially if grandparents would like to leave money to help their grandchildren only with particular purchases like a home or education. Here are some ways Ontario grandparents can approach the delicate subject of grandchildren in estate planning.
One of the first things grandparents should clarify is the reason for the financial assistance. Some may simply have excess money in their estate and wish to give it to younger family members with more financial need. Others have less resources or very specific intentions, so they need to be strategic about how they offer assistance.
One common option for Ontario grandparents is to leave money through a Registered Education Savings Plan (RESP). Informal trusts can also be used to divide money between recipients, though it does give grandchildren more leeway in how they spend the funds once the money is released. Gifts of property are also common, with some Ontario grandparents putting grandchildren's names on property before they die to avoid probate taxes during estate administration. It is important to think this through carefully, however, because this leaves the property susceptible if the grandchild has a divorce or bankruptcy.
Overall, involving the topic of grandchildren in estate planning is important. Any investment made to support a grandchild before death, or intentions to provide assets after death, should be included in a will. Including more beneficiaries in a will can complicate estate administration, so it is a good idea to work with an Ontario lawyer to support this process.