Ask Mary Beth: Money Q & A |
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Paying for grandchild's college expenses
We want to help our grandchild with college expenses, but
also want to ensure that the child performs as expected. How do
we protect ourselves from giving to a child who is not
conscientious? My lawyer tells me he will set something up for
$750. Is there something else we can do that doesn't cost so
much?
Mary Beth answers:
If you do not want to go to the expense of setting up a trust
document with specific stipulations for spending your money, you
could consider doling out your financial gift to your grandchild
on an annual or semi-annual basis. That way you could review
his/her grades before committing to another year of tuition. Of
course this kind of uncertainty could be difficult for the child
and the child's parents. But it's your money. You can do what you
like.
The federal gift and estate tax laws permit individuals to gift
up to $10,000 per recipient--$20,000 per recipient if gifted by
a married couple--without incurring any gift taxes that would
be applied against estate tax credits after death. If you are in
danger of exceeding this limit, you can send your contribution
directly to the college on your grandchild's behalf, and it will
not be charged against your annual gift tax exclusion.
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